The threat of foreclosure is something the Pomales family knows all too well.
When Jose and Diana Pomales bought their modest ranch house in Boston's Hyde Park neighborhood eight years ago, they could afford it. But along the way, they'd refinanced into a subprime loan with an interest rate that was adjusting beyond 10 percent.
Last summer, the family started getting foreclosure notices.
People behind on their mortgage payments are increasingly turning to nonprofit housing groups for help in working out deals with lenders so that they can stay in their homes.
"This is my home, and I don't really want to let somebody just take what we worked hard for," Jose Pomales told NPR in an interview in August.
Pomales originally got his loan from the subprime lender New Century Financial Corp., which then sold it to Chase Home Finance. He says the loan officers at New Century lied to him, promising that the rate would never go up, and that they would refinance him into a better loan soon. That never happened; instead, his rate jumped above 10 percent.
"They knew in a couple of years it was going to blow up," Jose Pomales says. "And we got left holding the bag."
He recently negotiated a deal with Chase Home Finance to lower his interest rate to 5 percent fixed.
"It feels very good. I can sleep at night," says Diana Pomales. "And now every month, we've been paying on time."
That 5 percent rate might seem too good to be true. But it actually can make sense for lenders to cut deals with borrowers. Foreclosures cost tens of thousands of dollars. And the houses then sit vacant and can fall into disrepair or get broken into and stripped of appliances — even the copper pipes can get ripped out and stolen.
That's not good for many of the companies and investors that own the loans.
Chase spokesman Tom Kelly says the company tries to keep homeowners in their houses whenever possible.
"If there is literally just not the income to handle the house, it doesn't do us or them any good to string it along," he says.
Pomales got help negotiating with Chase from a nonprofit housing group — the Neighborhood Assistance Corporation of America. At first, Chase offered to lower his rate down from 10 percent to around 7 percent.
But his housing counselor advised him not to take that offer, based on the budget they worked out together. So Pomales went back to the table and got his 5 percent interest rate.
Although the Pomales family is finally out of a bad loan, plenty of borrowers aren't so lucky. Recent reports by state regulators reveal that the mortgage industry is overwhelmed by substantial numbers of people who need to renegotiate the terms of their loans; most of these cases are still falling through the cracks.