One of the more commonly discussed methods of saving a home from foreclosure is working with the lender, either for a repayment plan or a mortgage modification. Many foreclosure victims try hard to get back on track but can not afford it, refinance but can not qualify for the loan, or establish a repayment plan but not afford the higher cost. For them, a successful modification will allow them to negotiate with the lender and alter the terms of the loan, which can give them the second chance they need and allow them to benefit from more manageable payments based on their current financial situation.

The lender is often seen by homeowners falling behind as their worst enemy, due to persistent, threatening phone calls, numerous mailings from the collections department, and the bank's hiring of a local law firm to sue for foreclosure. These are just a few of the tactics used by lenders to cajole homeowners into making a payment, even if they can not afford it. After missing a few months, many homeowners just want to end the foreclosure process any way possible in order to get some freedom again. However, it is usually more appropriate for homeowners to fight for a mutually beneficial solution.

The lender and homeowners both have very good reasons to work together and establish a plan to get out of the foreclosure process, especially if no other solution is available. Selling the home or refinancing the loan may be out of the realm of possibilities, depending on the circumstances leading up to the foreclosure. Thus, if the home is to be saved, in many cases the lender and owners must work together and modify the mortgage.

The Department of Housing and Urban Development (HUD) defines modification as "a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford." Lenders, according to common mortgage modification plans, may be able to extend the term of the loan and amortize the missed payments, or spread the defaulted mortgage payments over several months or years. The owners of the property will likely experience more affordable loan payments and be allowed to avoid foreclosure.

A number of banks, however, do not offer loan modifications to their clients. Because it is mostly larger banks and mortgage servicing companies that refuse to do this, homeowners can consider using local mortgage companies exclusively to obtain a mortgage. They are often more willing to work with families in the community and come to an agreement to keep the home from being foreclosed. Even when homeowners think they are unable to afford their home any longer, they may want to consider requesting a mortgage modification. The programs have numerous qualifications that must be met, of course, but as long as the homeowners have recovered from the original financial hardship and can prove a stable income, a loan modification may be the perfect solution.

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