The executive director of a non-profit group helping troubled homeowners in the central San Joaquin Valley says lenders and companies that service loans have in the last few weeks become more willing to help families facing foreclosure.

More have established "loss mitigation units" that are working with homeowners to refinance troubled loans, reduce interest rates or extend the lengths of the loans, said Randall Guerra, executive director of the Community Housing Council at Manchester Center in Fresno.

"They have set up an infrastructure," he said.

Wachovia and Wells Fargo were among the lenders that Guerra cited. Wachovia has ramped up a "modified refinancing" program where homeowners with problematic variable-rate loans are being put into fixed-rate loans for five years. The loans revert to the original rate in the sixth year.

Critics contend that is only a new version of an old problem - the 5-1 option loans that were common in 2004 and 2005, and which are starting to reset upward, threatening more families. They say the new loans simply postpones the inevitable.

The California Reinvestment Coalition, which is a group of non-profit housing groups, said most lenders are offering only a temporary fix, and will not consider reducing principal, which would be the best remedy.

Guerra acknowledged that might be the case, but said the Wachovia program and others give financially pressed homeowners five years of relief - and some hope that a permanent solution can be found in that time.

"It's a two-edged sword," he said, "But it gets people off the (foreclosure) track."

Guerra said Wells Fargo, which stuck to more traditional lending practices during the go-go years, has started contacting borrowers when they miss a payment, offering to reduce interest rates and extend loans to 40 years.

In addition, there is increasing pressure for a 120-day moratorium on foreclosures. California Assemblymember Ted Lieu, D-Torrance, introduced legislation last week that would force lenders to freeze foreclosure proceedings for four months to give homeowners a chance to work out a solution.

Guerra said families facing foreclosure should not assume their situation is hopeless, although many of them will wind up losing their houses. And the pressure will continue to build as the option-arm loans become due.

Still, his agency has been able to modify loans for about about 25% of the families that seek assistance. Guerra hopes that, soon, that percentage will increase as the government, lenders and policy makers devote more resources to the crisis.