Some highlights to keep in mind regarding loan modifications:
1. If the homeowner isn't working / does not have current employment, more than likely there's not much for them.
2. Some possible scenarios are:
A lowered interest rate for a temporary time period
Forbearance - a temporary suspension of payments to give the homeowner some breathing room, which may be followed by a repayment plan to catch up on missed payments.
There are mortgage counselers available through the US Dept of Housing and Urban Development - free of charge.
The Making Home Affordable plan, there may be a reduction in principal amount so that the monthly payment will not exceed 31% of the borrower's income, but that reduction is only temporary. The set aside portion will have to be repaid when the loan is paid off or refinanced or the home is sold.
www.hud.gov - click on "Foreclosure Avoidance Counseling"