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Ian Hirsch, owner of Fortress Credit Services, said lenders have reduced the principal owed for some clients, although that is uncommon. The monthly payments have been cut by 25 percent to 50 percent and interest rates have been trimmed to 2 percent.

"It's a positive step that the state is taking, making the banks actually listen," he said. "Today, it is just a forum for discussion, but the mediator can't make the bank change the terms of the loan."

The couple filed for Chapter 7 bankruptcy. A bankruptcy judged discharged the couple from the $258,000 debt on the condo but OneWest was allowed to foreclose. The borrowers paid $200 for mediation and the lender was required to pay another $200.

OneWest never brought a new appraisal to the mediation, as required, Ely Borax said.

He argued that the bank should reduce the principal to $99,000, which he said was $30,000 above market value. He and his wife could afford a mortgage for the lower sum, he said. That way, his wife would be spared the stress of moving. OneWest refused, he said.

"It's not reasonable to ask them to accept a loss of more than $150,000. That's not an indication of OneWest's unwillingness to negotiate," OneWest attorney Starr Arvay said during the hearing.

Ely Borax contended that the lender already incurred that loss and that the $99,000 purchase offer would save the lender money.