The resent trend has been mortgage companies are just leading people on when they tell people "send me your income and expenses we can modify your mortgage payments."  The majority of clients that I have seen in my office tell me the same story over and over, even though each may have a different lender. Example:  I was told that I couldn't get a loan modification unless I was behind on my payments, so I got behind.  Then they asked me to send proof of income and expenses to see if I qualified.  Each time I sent the documents requested they would tell me they were missing something and I would re-send it.  Then they told me to start making a temporary loan modification payment that was less than my regular payment.  This went on for 9 months.  I made my payments on-time each month until I got my last payment I sent back in the mail with a letter stating I didn't qualify. Some clients even received a foreclosure complaint in the mail or by process server as they were making their modification payments.  It seems to me that the mortgage companies have no rhyme or reason to their madness. 

So back to the question.  Loan Modifications, Good or Bad?  The answer is simple, the idea is good but the lenders are making it impossible.  I advise against asking for the modification unless it's your last option.  They are not on your side.  My advice is to save your house in a chapter 13 bankruptcy before you get too far behind and can't afford the chapter 13 plan payments.  You can file chapter 13 and force the mortgage company into mediation. The federal Courts then give the mortgage company a set time period to accept or denie a lon modification undre the HAMP program.  If chapter 13 is not an option and they are not working with you on a loan modification within a reasonable amount of time, then file chapter 7 bankruptcy and give the house back and start repairing your credit.