DON'T PAY AN ADVANCE FEE TO SOMEONE OR SOME COMPANY WHO OFFERS TO GET YOUR LOAN MODIFIED FOR YOU!

In most cases, you do it yourself. Will it be annoying to deal with lenders' loss mitigation workers? Yeah, you bet it can be. I always get a big laugh when media talking heads kvetch about how inefficient the government is. Apparently, these idiots have never dealt with bank bureaucracies (or half a dozen others I can think of--insurance companies', railroads, to name two).

If you're entitled to a loan modification, you'll probably get it if you hang in there. It won't be what you want in a lot of cases. If you have trouble making a $1,500 a month payment, will $1,400 be any better--especially if your house has lost a third of its 2007 value?

But hey--it's better than nothing, and who knows? You might do even better. Despite what you read in the news, a lot of people HAVE been helped with loan modifications. But you've got to ask.

IMHO, lenders will, at some point, become willing to write off parts of the loan balances. It happened after the savings and loan crisis in the early '90s, but it hasn't happened in the current era (at least in Oregon; big writeoffs have occurred in other states).

Anyway, don't pay someone to do it for you, unless you get to a point where you don't want to deal with it, or you think someone on the outside can do it better (moi comes to mind and I'm still doing it for free for a while). Again, don't pay big bux upfront and be sure to get a contract spelling out exactly what's going to happen and what it will cost.  Most loan modifications should take a couple of hours at most.

And even then, be sure there's a lawyer involved. At the Mortgage Rescue Cafe, we have one of Portland's leading law firms on the team. We'll steer you to a professional tax advisor if need be, too.