PHOENIX -- Many homeowners say their banks won't call them back regarding a loan modification; however, some homeowners are paying hundreds of dollars for a loan modification only to have the bank foreclose on them.

Valley resident Miguel Lozania said he was approved for a loan modification, so he signed his paperwork and sent the bank the $900 fee.

"It sounded like it was going to work," he said. "I even got a letter from IndyMac Bank saying they were going to do a modification."

IndyMac foreclosed on his house anyway, selling the home for $70,000. Lozania's original loan was for $205,000.

Another Valley resident, Joan Hoyt, said she wanted to refinance her loan before the interest rate on her current mortgage reset.

Her lender, Washington Mutual, said it just needed a $750 application fee; Hoyt paid it. As it turned out, Washington Mutual did not offer the type of loan Hoyt applied for.

The bank did not offer a refund of the application fee.

Homeowners across Arizona have written to 5 Investigates to complain about lenders losing modification documents, changing requirements for modifications and being unable to answer basic questions about the process.

Arizona Attorney General Terry Goddard stopped short of saying the banks' behavior is criminal; however, he called the complaints "very troubling."

"It may constitute deception on the part of the individual company that's leading these people along," he said.

Goddard said his office is swamped with complaints that he believes many of the larger banks should have been prepared for.

"What we're seeing is a financial industry that doesn't want to handle this problem," he said.

He also encouraged people who are having trouble with their modifications to contact his office.

As for Lozania, five hours before the story was set to air Monday, a spokeswoman for IndyMac's new owner One West Bank called 5 Investigates to say the company had made a mistake, and they are rescinding Lozania's foreclosure.

Washington Mutual refunded $750 to Hoyt after 5 Investigates contacted the bank about the investigation.