Optimism is a precious commodity, with the foreclosure prevention group estimating there are some 3 million homeowners 60 days late on mortgage payments and a few million others facing hardships like job loss or illness.

"The numbers are big," admits Schwartz, who heads the industry-led homeowner aid program, which reported a record 270,000 loan workouts in April alone.

"It's always: how can you be better in the face of a rising problem," she said.

The government swooped in this spring with a rescue program that buttresses industry efforts to heal housing. Almost half of the 33 servicers in HOPE NOW have signed on so far.

"As complicated as it is, when you have all these big companies putting all these resources into making it work, and the government resources helping them get it done, they'll figure it out," she said. "I'm an optimist. Sure, we'll get through it."

The highest unemployment in more than 26 years, as well as underemployment, are tipping many borrowers with prime credit into default. This has escalated the problem that began in the market for riskier loans to less qualified homeowners.

And it could make foreclosure prevention seem like catching a slippery fish without gloves.

In the longest recession and worst housing market since the Great Depression, borrowers that do get right-sided often re-default. Foreclosure activity is running at an all-time high and is seen escalating now that most temporary freezes have ended.

The hope is that the federal government's Home Affordable Modification Program, or HAMP, that kicked off this spring will mean more sustainable loan workouts, Schwartz said.

It is a complex program requiring intensive documentation to protect taxpayer dollars spent keeping troubled borrowers in their homes, making a modification a longer process. The pipeline of troubled loans has swelled as the kinks get worked through and lenders decipher who meets the criteria.

"That's why I'm not saying it's over yet because I see the delinquencies and I see what has to be done to keep people out of foreclosure," Schwartz added.

"I give it three to six months of getting through this pipeline of people who are looking for help and modifications and refinances through that (government) program, and I'm hoping we start seeing some stability more towards year end."

HOPE NOW is battling troubled loans on growing fronts.

It is working with the government to thwart foreclosure fix scams; linking possible job opportunities to its website, www.hopenow.com; beefing up its pool of housing counsellors.

Schwartz advises patience amid the frustration and understandable panic and acknowledges that some loans cannot be saved. HOPE NOW's homeowner hotline, 1-888-995-HOPE, draws more than 10,000 calls daily and loan servicers are inundated.

Rising layoffs, wage cuts and sliding prices that put sales or refinancing out of reach for many owners are high hurdles.

U.S. home prices slumped by more than 32 percent nationally over three years. The freefall created "negative equity" for many borrowers, meaning they owe more than their home's value.

"It may play into why people re-default," Schwartz said. "None of us has really absorbed or studied that closely, but I think that's going to be an issue obviously more and more."

The pace of loan fixes has been broadly criticized by many who blame the risky mortgages that lenders offered earlier this decade for triggering the housing crash.

But strides are being made.

"People forget, but the industry wasn't all marching together in the same direction when this first was pulled together" and coordinating best practices was a significant accomplishment, Schwartz stressed.

Modifications are nearing 150,000 a month from 18,000 a year and a half ago. HOPE NOW lenders are sharing data on both good and bad risks voluntarily, which she said is unprecedented.

Little-used Hope for Homeowners, a refinance program for troubled borrowers via the Federal Housing Administration, should also pick up, she said. "I'm very optimistic that that program will start to get used, and HUD (Department of Housing and Urban Development) will be rolling out some details."

Schwartz also cited HOPE NOW data showing the 208,000 foreclosures in the first quarter were little changed from the same period last year. Modifications, however, more than doubled in the first quarter to 391,000 from October 2008.

(Editing by Kenneth Barry)