Loan Modification

Byron MacLeod, a financial analyst at Gradient Analytics, said that with fewer bad loans, he would expect charge-offs to flatten out, boosting capital-reserve levels.

What's more, banks may stop posting huge provisions to their loan-loss accounts, lifting the pressure on their quarterly earnings."The growth in [nonperforming loans] up to now has been a significant concern, and the alleviation of this concern would be de-facto positive," added McLeod.

John and Grayce Coffman got a killer deal on their Fullerton home's mortgage – just 1 percent interest for five years.

That's a rate any homeowner can envy. However,  it came after six months of complex, sometimes contradictory, negotiations with the nation's largest home lender to avoid foreclosure. They couldn't afford their previous loan.

"It's fantastic. It really is," Grayce Coffman said. "That will give us time to regroup and find out what we want to do."

Amid a housing market hammered by record foreclosures, some experts say lenders are more willing than they were just a year ago to strike favorable deals with cash-strapped homeowners. Recent studies seem to bolster that perception.

But consumer groups say lenders, overwhelmed by the sheer magnitude of borrowers in trouble, aren't doing enough to make a meaningful dent in foreclosure totals. In Orange County alone, banks took possession of more than 1,000 homes in May and again in June. That far outpaces foreclosure records in the last housing slump.