Mortgage modification is not very likely if foreclosure proceedings have started. However, there are several options for help at that time, and it is not too late to talk with a HUD counselor and see what you can do. Every situation is different.
Anyone who is in their first mortgage and who is having a difficult time making their mortgage payments may be eligible for two programs. The first one is the Home Affordable Refinance program.

You should start by calling your mortgage servicer or lender and ask about the Home Affordable Refinance application process. You should ask your lender if it is authorized to provide a Home Affordable Refinance. If not, as of April 4th, 2009 borrowers whose loans are owned or securitized by Fannie Mae may also apply through any Fannie Mae approved lender.

If your loan is currently securitized by either Fannie or Freddie, you are most likely able to use this program. You can find out whether your loan is securitized by them by going to these web sites:

Fannie Mae - http://www.fanniemae.com/loanlookup or call 1-800-732-6643
Freddie Mac - http://www.freddiemac.com/mymortgage or call 1-800-373-3343

A good place to start is this web site http://www.makinghomeaffordable.gov/index.html to find out if you qualify for this program.
Actually, it is a good place to start when looking at any of the government programs. The site can determine your eligibility, find HUD counselors (free consultations), and give you a better idea on what may be possible for you.

The other program is called the Home Affordable Modifications program. It has less restrictions on it, but also less benefits. the same site I gave above, is where you can find more information on that program as well.

Another site that can help you with figuring out whether or not you are eligible for modification or refinance is http://www.hopenow.com/
It also offers free counseling (HUD approved), and is an alliance of some of the major lenders and the government departments that are running these assistance programs. It has a list right on the front page of a number of lenders that are actively doing loan modifications and refinancing.

And just to note, all of the sources I mentioned here are either government web sites or approved government alliances. They are not scam sites, or other fraudulent places trying to get money from you. The assistance is available free, and shouldn't cost you any money. You're trying to SAVE money, not spend more of it.

Good luck!
Source(s):
http://www.makinghomeaffordable.gov
http://www.makinghomeaffordable.gov/docs/borrower_qa.pdf
http://www.hopenow.com

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