A loan modification happens when a homeowner is a few months behind on mortgage payments. The lender agrees to modify the loan and adds the missed payments to the end of the loan in an attempt to help the homeowner avoid foreclosure.
The problem is that lenders reject many applicants for loan modification and most of those granted are temporary. Matt Hernacki points out that a homeowner has about the same chances of winning the lottery as he or she does of getting a loan modification.
All of the generic media stories about foreclosure tell homeowners to “communicate early” with their lender. It’s a sad truth that the lenders are overwhelmed with delinquent mortgages. They really have no interest in talking with borrowers. They pay lip service to loan modifications and really do nothing to help the homeowner in trouble.