For homeowners in trouble, loan modification has been hailed as the Holy Grail. But loan modification can be tricky business.

For starters, lenders are dragging their feet and modifying far too few loans.

Plus, a new study shows that 27% of all loans modified between January 1, 2008 and March 31, 2009, actually had their monthly payments increase!

With millions more foreclosures ahead, it's time for some straight talk on how loan modification really works and whether it's right for you.

Think the housing crisis is old news...think again!

• More than 2,000,000 Americans are facing foreclosure over the next couple of years.
• One in five mortgage loans was "underwater" at the end of 2008, meaning the loan balance was more than the value of the underlying property.
• A record 800,000 homeowners received a default or auction notice during the first three months of this year.
• Many borrowers are stuck with toxic adjustable rate mortgages, and refinancing is not an option.

What's the solution? Many people are wondering if loan modification is right for them. So let's look at what it is, how it works and whether it's right for you.

Before contacting your lender, make sure you know the basics of loan modification.

A successful loan modification should lower your monthly payment, ease your personal financial problems that can tear families apart and keep your family in your home. A loan modification should NOT be an expensive alternative that costs you more money (in the form of fees and charges) or leaves you still struggling to pay your mortgage.

What is a loan modification?

A loan modification is a permanent change in one or more terms of your home loan. That could include an interest rate reduction, a longer loan term, principal reduction, forgiveness of delinquent payments or a combination of all four. The goal is to make your new payment something you can afford on an ongoing basis.

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