"In January, loan analyst Moe Bedard noticed a promising development in the mortgage-servicing industry: More lenders started restructuring distressed borrowers' loans to avert foreclosure.

But in the months that followed, the trend reversed itself.

"Now, it's even harder to get a modification than it was five months ago," said Bedard, president of Loan Safe Solutions, based in Coronado, Calif. "They're just stalling now."

The "they" to which he referred are loan-servicing units, the bank departments that negotiate with troubled borrowers seeking lower rates and monthly payments on their subprime mortgage loans.

The high cost of renegotiating adjustable-rate loans, overloaded servicing departments with too few staffers and concerns about bank failures and investor lawsuits have forced a stalemate between some customers on the brink of foreclosure and the loss-mitigation specialists tasked with keeping those borrowers' payments rolling in.

In some cases, borrowers don't even know which lender to call, because their loans have been sold and resold as investments or assets of a failed bank.

The much-debated federal housing bill passed in late July isn't likely to change much for distressed borrowers, Arizona experts said, because its Federal Housing Administration refinancing plan requires participating banks to reduce the principal amount of each subprime loan by at least 10 percent - something banks simply aren't willing to do.

Still, they said borrowers seeking better loan terms have a decent chance of negotiating lower mortgage payments if they are persistent and have the type of income that would satisfy Goldilocks - not too little but not too much."