A quick search of the internet will show that loan modification programs have been generally unsuccessful.  In my practice as a bankruptcy attorney, I encounter debtors every day who are trying to save their home through a loan modification.  After months of submitting and resubmitting documents, jumping through one hoop after another, they are usually turned down for their loan modification and end up filing bankruptcy to save their home.

If the success rate of loan modifications is low, then why do the lenders even bother with these types of programs?  I suspect it is more about public image than helping people save their homes.  Before considering a loan modification, homeowners who are behind on their mortgage payments should contact a bankruptcy attorney to discuss their options.  Chapter 13 bankruptcy is available to nearly all homeowners as a way of stopping foreclosure and catching up on mortgage arrears.  Loan modifications allow homeowners to get current by putting that mortgage arrears back into their mortgage. This can be a costly process involving fees and additional interest.  In Chapter 13 bankruptcy, homeowners can repay their mortgage arrears without refinancing their loan, and without paying interest on the arrears.