Revenge can be sweet. It can be even sweeter when you use your enemy’s own weapons to extract vengeance.

Six years into the worst wave of foreclosures since the Great Depression, shoddy underwriting and legal shortcuts are coming back to haunt mortgage lenders. Homeowners, sick of being pushed around by the banks, are fighting back, sometimes with David and Goliath results.

In 2008, Jewel Miser and her husband Jack began trying to get Bank of America to modify their mortgage when Jack lost his job after a local auto parts factory closed.

“We were just a month behind then,” said Jewel. “But I tried every way in the world. And they just put me off and gave me excuses.”

Though the pace of home sales picked up last month as the economy and job market improved, home prices have yet to show any meaningful turnaround.

The National Association of Realtors said Wednesday that sales of existing homes – which account for most of the housing market -  rose 4.3 percent in January. That pace of sales, about 4.5 million a year, is still much less than the 6 million rate that’s considered “healthy.” And it’s far below the peak of 7 million homes sold in 2005.

Home prices are still going nowhere – they fell 2.2 percent in January, according to the NAR. That’s because there is still no end in sight to home foreclosures: so-called “distressed” home sales accounted for 35 percent of sales in January, up from 32 percent in December. As those homes are sold, they push prices lower for all houses on the market.

That process delayed foreclosures, as bankers wait to sell one home before scheduling the next foreclosure sale. As home sales improve, more of that “shadow inventory” of houses in the pipeline will eventually come to market.

 “We think the foreclosure process will accelerate, which will speed up the flow of distressed inventory,” said Michelle Meyer, an economist at BofA Merrill Lynch Global Research in a note to clients Wednesday

Home prices have pulled back fastest in parts of the country that saw the biggest run-up during the housing boom. But the latest figures show prices falling in every region of the country. In the Midwest, which was largely spared the worst of the housing collapse, prices fell by 5.5 percent on average in January. In the West, where prices have been hardest hit, the drop was a modest 0.7 percent. Prices fell 2.2 percent in the Northeast and 1.4 percent in the South, according to the NAR.

Once prices stabilize, they have a long way to go before recovering their 2005 peak; some estimates expect that to take until 2020. For historical reference, the last time home prices fell 33 percent was in the 1930s  when the full cycle from peak to trough to peak took 19 years.

Record low interest rates have made houses more affordable, but it’s not likely they’ll fall much further. The Federal Reserve recently made an unusual public promise to keep rates low for the next three years. But as the economy continues to improve, the odds are that rates will move higher not lower from here.

Home buyers who take the plunge, meanwhile, are summoning up plenty of patience when it comes time to apply for a mortgage. Lenders are being extremely choosy about who they approve - even for borrowers with a steady job and good credit.

As the housing market has been suffering from an excess of supply of foreclosed homes, demand for houses has been falling for a variety of reasons. Many of those foreclosed families face a long wait to rebuild their credit and household finances before diving back into homeownership. The drop in home prices has left roughly 12 million homeowners “underwater,” owing more than their house is worth. Many of those are potential “move-up” buyers who are now unable to sell their current home without taking a big loss.

There has also been a sizable drop in the number of new household formations, which have fallen to the lowest level in decades. Before 2007, new households in the U.S. were formed at the rate of about 1 million to 1.3 million a year. That pace has fallen to between 600,000 and 700,000, according to a recent analyst by Goldman Sachs economists.

There are a variety of reasons for the slowdown, according to the report. The biggest single factor is the larger share of 18 to 34-year-olds who are choosing to live with their parents. Falling marriage rates have also put a damper on new household formations, along with high unemployment rates that force people to “double up” with friends or family.

Economists expect the household formation rate to recover to historical norms, rising to 800,000 this year and level off at 1.1 million in 2013.