Why did (perhaps "do") banks hassle so many homeowners who wanted to refinance?

Gretchen Morgenson's NYT story (here) points out the link between incentives not to refinance (more interest charges and, of course, maintaining the higher interest rates) and the small number of refinancings that actually happened.  My favorite quote from her article?

It is never wise to exclude incompetence as a reason for the trouble that borrowers may be having with loan modifications. But Mr. Inwald [the director of foreclosure prevention at Legal Services NYC] said there could be a financial motivation as well. Delaying a borrower’s loan modification request can be profitable for a bank; extra time for the bank means more interest and fees can be charged to the borrower, increasing the amount owed on the mortgage.