Sarah Portales wants to keep paying her mortgage on time, but she's got a problem. Her monthly payments are $3,500 and her income is slightly less than that. All the efforts this San Jose custodial supervisor has made to find a way to refinance her loan into something she can afford have so far led nowhere.

Portales is the face of a problem that is troubling the real estate market in San Jose and across the country: As the residential market flattens and lending standards grow tougher, thousands of subprime borrowers are confronting mortgages they can't afford, with few options to refinance into new loans. Mortgage delinquency and foreclosure rates have surged.

On a comparative basis, Santa Clara County still has relatively low rates of delinquency and foreclosure compared with California's Central Valley and other hard-hit areas. Data shows that most of the local mortgage delinquencies are found in lower-income neighborhoods.

But even in the valley, the agencies that offer help to at-risk homeowners are finding their small staffs swamped by the problem. One legal group, the Fair Housing Law Project, is so backed up it stopped taking new calls this month; it will start again in June.

"Lately, we've just had a huge increase in the number of cases we're taking," said Annette Kirkham, the group's senior staff attorney. Many recent calls are from homeowners who've been scammed by "foreclosure rescue experts," she said, while others are from people who feel they were the victims of fraud by a loan broker.

The good news is that consumer advocates, lenders and lawmakers alike are looking for more ways to help these beleaguered homeowners - some are promoting borrower-assistance hotlines, others are calling for a moratorium on some foreclosure proceedings, or are pushing for taxpayer bailouts. (For a list of local agencies' efforts, see below.)

Portales could certainly use the help.

She is one of many borrowers nationwide who obtained bigger mortgages in recent years than their income and assets should have allowed. The pain only gets worse when the interest rates on adjustable-rate loans increase. About 29,730 loans, or 24 percent, of the adjustable-rate loans held by San Jose-area homeowners will experience their first interest-rate adjustments this year, according to an estimate from First American LoanPerformance. The loans are popular with first-time buyers because initial monthly payments are typically less than those for fixed-rate loans.

"I was ignorant; I didn't know how it all worked," said Portales, 48, a single parent who also lives with and cares for her 83-year-old mother.

A custodial supervisor at San Jose State University, Portales bought her first home, on San Jose's East Side, in October 2005. She paid about $589,000, according to public records. She said her mortgage broker, who also acted as her real estate agent, exaggerated her income on her loan application, allowing her to qualify for the loan.

Like Portales, many recent buyers were counting on refinancing into loans with lower payments a few years after they bought, said real estate agent Michelle Gutierrez, the local president of the Hispanic Association of Real Estate Professionals.

"It's all about sustaining homeownership at this point," she said. Regarding the danger of mortgage delinquencies, "it's mainly here on the East Side, but it's spreading as well."

Now, banks have toughened up their lending standards, so owners with little savings, little equity or tarnished credit records are finding it hard to get new loans. Many who applied without providing documentation of their income won't be able to do that the next time around. Lenders have stopped accepting as many of those "stated income" applications, often termed "liars' loans."

In addition, home values have not risen the way the borrowers had hoped. Add the factors together, and some borrowers are in precarious situations. The Mortgage Bankers Association of America estimates that about 5 percent of U.S. homeowners have subprime adjustable-rate loans. Of those, 5 percent are delinquent. Of that 5 percent of 5 percent, about 2.5 percent will be "worked out" with lenders, and the rest will be foreclosed upon.

Portales, for example, will incur a $15,000 prepayment penalty if she refinances before October, she said. Now, she has two renters and a little help from her mother's Social Security benefits to help make her payments on her three-bedroom home.

Santa Clara County's default and foreclosure problem is small compared with those in many parts of the state and regions of the country. There were 1,058 homeowners in the county who received "notices of default" from their mortgage lenders in the first quarter of this year, while in Sacramento County, for example, 3,234 homeowners became delinquent in the first quarter. On a per-loan basis, homeowners in Sacramento County were nearly five times more likely to have defaulted in the first quarter than were Santa Clara County homeowners. San Diego County owners defaulted at nearly four times the rate locally; while Riverside County had more than five times Santa Clara County's rate.

The hardest-hit valley neighborhoods tend to be those with lower home values and median household incomes, and therefore more first-time buyers. And many of the affected neighborhoods have a majority of Latino residents. One example is ZIP code 95122, on San Jose's East Side, which is 56 percent Hispanic and has a median household income of $65,015 - lower than Santa Clara County's median household income of $83,568 - according to Claritas Research. There, about 11 out of 1,000 loans in a sample loan pool defaulted in the first quarter, the highest percentage in the county, according to data compiled from public records by DataQuick Information Systems.

Lenders typically call or send letters to delinquent buyers asking them to contact the lender's "work-out" or "loss mitigation" department to seek solutions before foreclosure proceedings begin. Solutions can include "forbearance" - temporarily suspending payment requirements - or modifying the terms of the loan so that the borrower can afford it, sometimes at a loss to the lender, said Laura Pephens, a board member for the California Mortgage Bankers Association.

Research from Freddie Mac indicates that more than half of delinquent borrowers don't contact their lenders before foreclosure begins. But mortgage-industry experts say the first thing a stressed-out borrower should do to avoid foreclosure is to call the lender and explain the problem.

The goal of lenders "is not to have to ever foreclose on that property, because that is a very costly process," costing the lender an average of about $60,000, Pephens said.

Not all distressed borrowers will qualify to refinance into a loan they can afford.

When Portales sought advice, she was told the best course would be to sell her house and get out from under her mortgage, whose payments so drastically outstrip her ability to pay them. She might be able to afford a condo, or she might have to wait and save money before she can buy a home again.

"It's not something I wanted to hear or would like to do," Portales said. She thought she'd achieved the American dream for herself, her 10-year-old son and her mother. Now she's fighting depression at the thought of moving into a rental unit and praying for a good outcome. "I felt, `Finally I'm able to move up little by little.' I've been struggling all my life, you know, and so I've still got to continue struggling. But I thought I would be able to stay in my home."