We are facing foreclosure on our home. Can we get a loan modification with our mortgage?

If you can negotiate a loan modification with your mortgage lender depends on a variety of factors. To find out if you can obtain a loan modification, you must contact your mortgage lender and discuss your situation.

According to the U.S. Federal Trade Commission (FTC), one of the things you must be prepared to do when negotiating a loan modification is show that you’re making a good-faith effort to pay the money you owe to your lender. This means that you can show your mortgage lender that you’ve reduced your other debts and expenses such as car payments to get back on track with your mortgage.

A loan modification means that you and your mortgage lender agree to change—permanently—the terms of your mortgage so you can pay your mortgage payments. Some terms of your mortgage that can change include extending the number of mortgage payments to include your missed payments or reducing your interest rate. In addition, your mortgage lender may agree to cancel, or forgive, a portion of your mortgage arrearage.

A loan modification is a complicated process. According to the Mortgage Forgiveness Debt Relief Act of 2007, you must report the forgiven debt on your federal tax return even though you may be excluded from paying taxes on it. Thus, to understand a loan modification, seek legal assistance. A real estate lawyer will review the offer and make sure it is something that you can successfully complete.