Out of curiosity, CAN they set things right?
Depends on what "is" is.
One can easily deal with the existing loan - it was his son that let it default.
The other; if "right" is an adjustment in value, yes. If "right" is extending a 20 year loan to 40 years, no, because that's only worsening the burden. He's most likely going to step away from the house and accept the onus while the bank trades a write down today for another empty building in a recently upscale neighborhood. A house they might sell a year from now for about one third.
(Point is, he's trying to do whatever he does in proper fashion - before a default - while the bank can't even use the same alibi twice in a row)