The most common ways to do a loan modification is to lower your interest rate to the current market rate or stretch the mortgage payments over a 40 year period.  You will still pay as much, but you will have longer to make those payment with the latter choice.

For those that have a higher adjusted rate, you may  have be a good candidate for a new modified loan, even if you’re already in the foreclosure process.  The overall goal of the bank is to calculate and meet a monthly payment that is no more equal to 31 percent of your monthly income.  Thus, you will still need to meet this requirement for a loan modification.

In some rare cases, lenders may be willing to lower the principal on the property to a level of your home’s current level due to the fact that many homes currently have mortgages bigger than what the home is worth.

The program is entirely voluntary, so it is up to the lender or the mortgage company servicing the loan for the investors.

Fees include:

• Missed Payments and Interest
• Administrative Fees totally $10 to 15K for going into default
• Auction will total about $15,000
• If nobody bids 90% of the appraised price, they will end up owning the property at Auction.
• If the bank now owns the property, they need to hire a listing agent to sell the property
• During the listing, the banks loses money each month owning the property

If you cannot afford making your payments, typically banks will work with you and be accomodating if you tell them what is happening to your finances.  They do not want to foreclose.