Of the many possible ways to avoid foreclosure, loan modification is often considered one of the most desirable options. Although their is no assurance that a homeowner will receive loan modification, it is generally a wise decision to request it nonetheless. For loan modifications, there are two main resources that should be consulted with - the lender or government contacts, such a HUD counselor. With the onset of recent economic decline, an increasing amount of federal loan modification opportunities are available. In efforts to improve the United States economy as a whole, the government has granted quite liberal funding to these programs, which create better mortgages by modifying terms of the loan.

In a similar manner, lenders are often times willing to modify loans also. If the homeowner is able to continue paying their mortgage, the lender can relieve themselves of the hassling legal process that would have otherwise ensued. Based on this fact, lenders will negotiate reasonably with homeowners of possible ways to turn from foreclosure. In many cases, this can mean allowing the homeowner to continue with improved terms (loan modification), rather than them being unable to pay. When this is the case, the bank keeps itself profiting from the loan and the homeowner exits the foreclosure process with the house still in their possession.