Despite the efforts of government officials and homeowner advocates and counselors, foreclosures are still occurring at an all time high. However, foreclosure is one of the least desirable options, not only for the homeowners, but also for lenders. In fact, many analysts say that lenders lose more money foreclosing on a home than they do working with the homeowner to bring a loan current.

In fact, another way to look at the situation is through simple mathematics. It may cost a mortgage servicer $50,000 to foreclose on a homeowner, but it may have only cost half that to perform a home loan modificaiton to make it more affordable to the homeowner. Everybody is happy --- the homeowner gets to stay in his or her  home and the lender doesn't take quite the financial hit it might have if it foreclosed on the home.

While loan modification is the best route for the homeowner and the lender, there are usually a few obstacles in the way. These obstacles include:

* Lack of communication on the part of the borrower: When homeowners fall behind on mortgage payments, the first thing they usually do is start avoiding contact with the bank. They are so stressed out and ashamed about their financial distress that they don't even give their lender an opportunity to help them.

* Borrowers taking advantage of services they don't actually need: Many lenders feel that when help is offered too soon or with too much ease, homeowners will take advantage of services they don't actually need. This is why the approval process to modify a loan is rather stringent.

* Not enough personnel to handle the flood of distressed homeowners: Until now, the number of homeowners in actual need of foreclosure prevention assistance has numbered in the hundreds of thousands each year. For this reason, many lenders were able to operate a small staff of people skilled in dealing with these particular cases. However, now that the rate of foreclosures numbers in the millions, these loan modification departments are overwhelmed with the sheer number of requests for assistance they receive on a daily basis.