How it works in a nutshell is that a borrower will contact a mortgage broker to re negotiate their mortgage, possibly by either extending the loan term to lower payments or other means in which can help lower your monthly payments.

If you are looking to modify your existing mortgage, there are a few things you should do to prepare before you contact a mortgage broker.

You will want to make a financial statement that lists a tally of all your monthly expenses that you make on an ongoing basis for you and your family. This would include such things as utilities, grocery bills, clothing, car payments, insurance, medical, gas, credit cards etc. Once you have made a complete list of expenses, you will want to create a spreadsheet to give an average for the last 3-4 months in case of varying expenses to give to your broker.

Remember that before a broker even considers a loan modification, he will ask you for a financial statement, so be prepared and have it ready before you make that initial call to a lender.

Prepare a 'hardship' letter. A hardship letter is basically a 1 -2 page report (no more than 2 pages) on why you need someone to look at your loan to modify it. Some possible reasons could be due to job loss, or the fact that you were in an adjustable rate mortgage but you have lost equity in your home due to the property value drop in recent times and are no longer eligible for a refinance. All these things would be considered as valid explanations that you could include in a 'hardship' letter.

Put some time aside of at least an hour or 2 every day to start calling various brokers and lenders. This can be a time consuming process, because you will be subject to long waits on the telephone, you have to talk to many different representatives and go through your financial statement and hardship letter. You will want to be able to answer all their inquiries as best as you can so that they can determine if your are eligible for a loan modification or not.

You should also have pay stubs and bank statements ready because they will most likely ask you to submit these items by fax if they don't take this information over the phone. So be prepared to fax your financial statements, hardship letter and all other stubs and account statements before you call.

You must be aware that the turn around times can take anywhere from 15 -30 days and some banks are taking up to 60 days to review your loan modification request. It all depends on your situation, if you are close to foreclosure, the banks will give higher priority for those cases, if your situation is not considered crucial then you stand a chance of waiting much longer for an answer.

It doesn't matter where you are in all of this, if you are making your payments, and you don't have an adjustable loan, but things are tough or you are in an adjustable rate mortgage, yet you haven't made your payments for the last couple of months, or maybe you have already contacted somebody for a loan modification and you got denied. You still have a chance to get help, you just need to know somebody who understands how these institutions work and what it takes to get approved.

This is where having a good loan modification mediator comes in. I many cases people will try to get the paper work done themselves and try to negotiate with lenders when they have never done such a thing before.

Remember the banks and lenders are professionals who don't have your personal interests at heart. They understand the ins and outs better than you and will offer what suits them best, if you get them to approve your loan modification request in the first place.

The best way to get a good mediator is through either word of mouth referrals or do an in depth research online and talk to as many people as possible in your area. This is the only way that you will have a good chance at winning the battle with lenders.