If you are in trouble with your home loan and expecting loan modification help, you may be out of luck. If you do get help, you may end up in loan modification hell.

Q: I’m currently thirteen months behind on mortgage but am interested in keeping my home. My question is how do I know if I qualify for programs (loan modification or otherwise) that would let me stay in my home without losing it?

A: These days you raise an interesting question. You are thirteen months behind in your mortgage payments. You haven’t paid your lender in over a year. With that in mind, it would be worthwhile to know whether you have saved that money and have it available for future mortgage payments.

So the question is whether you can save your home from foreclosure.

Most of the loan modification programs that have been announced by the government have been a failure. These programs have helped some homeowners but the vast number of homeowners that have applied for assistance through these government sponsored programs or with lenders have not received any help. In fact, they have ended up in loan modification hell.

With those statistics in mind, you’ll soon see that the future is bleak when it comes to having your lender “help” you stay in your home. You may stay in the home for a while, but we assume that your lender has already commenced foreclosure proceedings against you. If you have not challenged those foreclosure proceedings, at some point in the future, the lender will proceed and attempt to foreclose on the home, evict you from your home and sell the home in a sheriff’s sale.

So, we go back to your question and have to learn more about your financial situation. If you are unemployed, the system does not have much in place to help you out. If you are employed, then the question becomes as to whether you have the means to pay the expenses for the home including the mortgage payments. If you have income, then there might be a chance to enter into a loan modification program.

But the truth is that the lender will still try to decide at this point whether it will get more out of foreclosing on your property than if you are granted a loan modification. The lender will also be looking at all of those missed payments.

At this point a lender might think that you won’t pay on a loan modification and may just decide that foreclosure is a better option for them.

Without a true government mandated plan that has certain requirements for lenders – which isn’t forthcoming – the idea that lenders will actually try to keep borrowers in their homes is a long shot. For most lenders it seems, their bottom line over the next quarter or two is more important than what might happen to neighborhoods or the real estate market today, tomorrow or over the next year or two.

It’s hard to read the minds of the lenders, but you do know that they are in it to make a profit. If they are servicing loans, they are looking to maximize the money from the loans they service. If they own the loans, they want to maximize the money they get from these loans.

In many cases, that translates into banks turning down a short sale today but accepting a foreclosure or a deed-in-lieu of foreclosure down the line.

Real estate brokers are puzzled by bank decisions to turn down some short sale offers and accept others. It sometimes seems that the market is fragmented even within the same bank, with some bank offices or negotiators more willing to get things moving.

Some banks have been better at dealing with loan modifications and have a higher success rate than others. But the overall numbers are dreadful.

So while you may want to keep your home and work with a lender on a loan modification, the question after thirteen months of not paying on your loan, is whether you can afford the home you are in and whether your lender would even be willing to work with you.

You’re not alone; there are millions of homeowners struggling to make ends meet and the housing market is just terrible. Many homeowners were never late on their payments and applied for loan modifications only to have the lenders put them in trial loan modifications, report them as delinquent on their loans, start foreclosure proceedings, deny them a permanent loan modification and leave them worse than they were before they came to the bank for help.


Others stopped paying their loans, and have effectively lived for free in their homes until the banks foreclosed on the homes and the borrowers were forced to move.

The housing crisis is really terrible out there and is in desperate need of having someone with leadership skills to work with all of the different players to come up with an effective solution.

The kick the can down the street solution has not worked so far.