• Many homeowners are in need of mortgage modifications.money matters image by Pix by Marti from Fotolia.com
  
  Most mortgage lenders are willing to modify troubled home loans instead of foreclosing on them. In many situations, it is often more cost-effective to offer distressed borrowers more affordable terms on existing mortgages. Some modification options involve suspending interest payments, deferring payments to begin at a later date and simply allowing borrowers to make new payments they can safely afford.
  
  

Satisfying Past Due Amounts

• Almost all lenders will allow troubled borrowers to bring their accounts current by satisfying past due payments. While past due accounts usually involve sums of money most homeowners do not have, including penalties and interest, lenders will sometimes waive fees and allow accounts to be brought current through a series of installments.
  
  

Deferment and Forbearance

• It some cases, lenders will allow borrowers to defer making payments until their financial situations improve. Some deferment options are also part of forbearance agreements, whereas payments are deferred. However, interest continues to accumulate on the loan. Borrowers agree to make interest-only payments or have deferred interest rolled back into their loan. Deferments and forbearance agreements are common for borrowers who are unemployed or suffer temporary financial setbacks.
  
  

Mortgage Restructure

• Some borrowers, especially those stuck with adjustable-rate or balloon loans that have adjusted beyond their budgets, are unable to refinance or sell their homes. By restructuring many of these loans, banks will offer more affordable terms and payments that fall within borrowers' ability to satisfy their monthly obligations. Some programs involve changing adjustable mortgages to fixed notes and lowering interest rates to reflect lower payments.
  
  

Short Sales and Foreclosure Bailouts

• A lender may allow a borrower to sell their home for less than is owed on the mortgage. This transaction, called a short sale, often leaves a balance on the loan, which is usually paid by private mortgage insurance (PMI). The buyer, in turn, can rent the home to the former owner or re-sell it to them with private financing. A foreclosure bailout involves a lender allowing a past-due borrower to seek financing from another lender in order to pay the existing loan in full. Meanwhile, the lender suspends foreclosure proceedings while new financing is in process.
  
  

HUD Rent-Back Options

• Borrowers paying on Federal Housing Authority (FHA) loans and facing foreclosure, are sometimes allowed to remain in their property as tenants of the U.S. Department of Housing and Urban Development (HUD). These agreements commonly involve borrowers surrendering their homes (called a deed-in-lieu of foreclosure) to the agency in exchange for stopping the eviction process. HUD then acts as a landlord and may choose to sell properties back to original owners, continue to rent them or sell them to other buyers when the market improves.