Lenders are joining with nonprofit counseling agencies in an attempt to persuade quiet borrowers to come forward so they will not lose their homes.  They've also convinced the Advertising Council to launch a three-year public-service campaign aimed at convincing late payers to come out from behind their locked doors and talk to impartial, third-party counselors about how they can get back on the straight and narrow.

It's too early to know how many owners will face the very real possibility of being unable to make their house payments. But already, 167,000 new families enter into foreclosure every three months, according to the Mortgage Bankers Association. And that could just be the proverbial tip of the iceberg.

With mortgage rates climbing, millions more borrowers with pay-option and interest-only loans face the prospect of larger payments in the coming months. Even those with more conventional adjustable-rate mortgages will be feeling the pinch.

According to an estimate by the PolicyLab Consulting Group, an Ithaca, N.Y., consulting firm with an expertise in housing economics, $375 billion worth of loans will adjust to higher rates this year and $1 trillion will reset in 2007. Couple that with higher energy costs, higher homeowners' insurance premiums, higher property taxes, and it's easy to see a disaster in the making.

If the rate on a 5-year-old, $200,000 interest-only mortgage moves up just 1 percentage point, from 6.1 percent to 7.1 percent, and begins requiring a payment to principal as well as interest, the monthly cost would jump $409, from $1,021 to $1,430.

Now suppose a 7 percent, $200,000 loan in which the borrower can make a full payment, a minimum payment or pay something in between. Most people chose to pay only the minimum, which often isn't even enough to cover the interest owed, so the difference every month was added to the outstanding balance.

If this was the case and the rate rose to 8 percent, again just 1 percentage point, the payment at the beginning of the sixth year would jump $928, from $643 to $1,571, and the borrower would owe $30,000 more than he started with.

Particularly hard hit will be underserved borrowers who often don't understand what they've gotten themselves into, are more likely to experience job loss, major illnesses and other life-changing events that tend to disrupt their ability to make timely payments, and have a much more difficult time recovering from financial trauma.

History shows that the majority of borrowers in default -- that is, 60 or more days late -- will self-cure. In the past 20 years, the foreclosure rate has never gone beyond 0.5 percent. But when you consider the millions of loans outstanding, even 0.5 percent is a huge number, warns J. Michael Collins, a principal at PolicyLab.

Lenders and the companies that administer loans on behalf of the investors who own them have a wide array of tools at their disposal to help troubled borrowers. Not deadbeats who simply refuse to make their payments as promised, but borrowers who are in financial straits due to no fault of their own and can demonstrate an ability to catch up on what they owe.

Among other things, they can reduce or suspend your payments and cancel late fees, allow you to make up what you owe in small increments over 24 months, add what you owe to your loan balance and allow you to start over with a clean slate, sometimes at a lower interest rate, or extend the term of your loan.

Many folks believe their lenders want to take their houses away from them because they make money doing so. But the truth is, lenders lose, too -- up to 60 cents on the dollar, in some cases. The typical cost of a foreclosure, which is a long, drawn-out legal procedure that can take months in some states, is $59,800, according to Freddie Mac, a major supplier of money for mortgages.

That's why big investors like Freddie Mac and Fannie Mae actually "incentivize" lenders to work with troubled borrowers. "We want lenders to be aggressive," said Ingrid Beckles, vice president of default asset management at Freddie Mac. "Not just in collections but in reaching out to help people. We even pay them to do so."

Nevertheless, studies show that half of all borrowers in default have no contact with their lender, and two out of five who go into foreclosure never talk to their lender. Says Beckles: "The attitude is, 'If I don't call, they never can get me,' but that's an express train to foreclosure."

Studies also show, however, that borrowers are much more willing to speak with counselors from agencies in their own neighborhoods, who, as participants in a Chicago focus group see it, "have no ulterior motives" and are "more concerned about saving your house and keeping the community stable."

Meanwhile, the Spanish soap opera, or "telenovela," will play on local on cable outlets as financial-institution sponsors are lined up. The show, "Nuestro Barrio," or "Our Neighborhood," uses entertaining story lines of romance, jealousy and conflict to engage viewers. But it also introduces valuable lessons about banking, credit and homeownership.

The story "involves families in their quest for the American Dream," says Brad German, a spokesman at Freddie Mac, which underwrote the show's production. But toward the end, in an attempt to "defuse anxiety about approaching lenders," the script "introduces model positive borrower behavior" when one of the characters loses his job and is advised to call his lender for help.

Edwina Baniqued