Jeffrey and Carol are ordinary American couple who secured a home mortgage early in their marriage. They paid their dues on time in the first five two years. Jeffrey worked as vehicle mechanic in renowned car manufacturing company, while Carol stayed at home. When their three children reached school age, Carol had to work as a part time fast food attendant to supplement the family income. In addition, she managed to rent a small store space from her friend which she subleased for a modest profit.

Then last year, the looming financial crisis occurred and affected business in all sectors, including car manufacturing companies. A number of establishments folded up while some resorted to downsizing. Among those affected was Jeffrey. His company terminated his services. He had a family to feed, mortgage to pay, and other debts to reckon but he was jobless. For several months, he defaulted on their mortgage payments.

Then one day the inevitable came. Jeffrey received a letter of home foreclosure order.

Many American families are in the same sad predicament with Jeff and Carol. Unable to pay their mortgage dues and the corresponding penalty charges, these families face losing their homes through foreclosures.

But here's the good news. Jeff did not lose his home. No, he has not yet found a stable job but he managed to keep his home from the risk of foreclosure.

His secret? He applied for home loan modification.

What is a Loan Modification?

In essence, it is a new loan agreement between the lender and the homeowner. The lender agrees to reduce homeowner's payment and interest rates, extend the term of the loan, lower the loan balance, or a combination of all these three in order to keep your home and avoid a possible foreclosure.

Documents Needed for Loan Modification

a.) Hardship letter-this contains all the hardships you encounter that underline the reasons why you could no longer pay your dues

b.) Completed Income & Expense Worksheet- this will give lender an idea of your current financial situation

c.) Completed borrowers information sheet

d.) Your current sources of income

e.) Copies of foreclosure notice you received from the lender

f.) Copy of loans or mortgage statements secured against the home

Steps To Apply For A Home Loan Modification

1.) Prepare all the necessary documents and ensure these documents are in order.

2.) Write your lender a hardship letter. Tell them the reason you can no longer pay your dues --- e.g. you lost your job, failed business, job relocation, illness, etc. Keep the hardship letter in just one page. You see, the lender's staffs are busy people and they have no time to read ten pages of letter. Be polite and respectful in your letter. Be sure to keep a copy of your hardship letter. After mailing or faxing your hardship letter, wait for a day or two. It could take up to 3 weeks before their lender would respond.

3.) When two days have passed, make a telephone call to your lender's office. Inquire about your request for loan modification. Again, be polite but straightforward. Write down all the pertinent points that transpired in these telephone conversations. You need this document in case your lender abused or neglected you. You can then go straight to the Housing Urban Development (HUD) and file a complaint against your lender.

4.) For speedier processing of your loan modification, seek legal assistance. Get a lawyer you can trust. Don't worry if you can't afford a lawyer. Consult with the Housing Urban Development officials and they will be too happy to assist you.

If all your documents are in order, and you have followed all the outlined steps above, you will surely get your much-needed loan modification request. You can then say goodbye to foreclosure order and keep your home for good.