Racine Leon has spent the last few months in a state of near panic. She refinanced her San Jose home at the height of the market when it was worth about $740,000. The home wasn't in foreclosure but the vice was tightening.
"I couldn't see a light at the end of the tunnel, it was just overwhelming. I was stressed," said Leon.
Like many people Racine's adjustable mortgage was shooting up, to 8.9% at a time when her home value was dropping dramatically. It's now worth about 520,000. "
Fortunately, her lender was willing to work with her.
Today Racine is signing a loan modification that reduces her interest rate with Wachovia down to two percent. Wachovia was just bought by Wells Fargo two weeks ago.
Mortgage broker Doug Jones believes the tide is finally starting to turn for homeowners who have been waiting for months to get some relief.
"So I think everybody is starting to understand this has to work and the banks are starting to work and the people doing the negotiations are starting to understand. So everyone is starting to understand the job now," said Doug Jones with Mortgage Magic.
"Hope Now" an organization that represents the mortgage industry and consumer groups, says it has been working aggressively to prevent foreclosures and keep people in their homes.
The group says that in September the mortgage industry helped a record 212,000 homeowners avoid foreclosure. That's 30,000 more than the previous record which was set just a month earlier.
Last week in testimony before congress, FDIC Chairwoman Sheila Bair touted the benefits of loan modifications. Some realtors say many more are needed to stabilize the troubled housing market.
"If we could keep people in the homes that would start to help the supply and demand because there would be fewer foreclosures, bank-owned and short sales flooding the market that then hurt the resale market and that's what needs to happen," said Cherie Colon with Windermere Properties.
For Racine Leon a loan modification was the answer she was after.
"That's a glimmer of hope. It's too good to be true and I feel very blessed and excited about it," Leon said.
Doug Jones hopes he'll start to see many more clients with a smile.