My experience with this from client feedback and trying to help clients myself is that this is not an easy process. I am not saying it doesn't happen, I just have not had any success with it on behalf of a client and have not had a client report to me success. A member of my team spent over 8 hours on the phone with a big bank who said publicly they would be helping borrowers modify. After 8 hours of holding, transferring, getting cut off she still didn't have anyone to help her or even a lead on possible help for the borrower. Lender loss mitigation departments are so overwhelmed with foreclosures and short sales that in my opinion it very unlikely that they will expend their resources helping those who can afford the loan - just because the home has lost value.

My team and I work on many purchase loans and being that my market is mainly Arizona- nearly all of the loans we have done in the last 6 months are bank owned or short sales (short sale is when you work with the current mortgage bank to sell the home for less money that what is owed on the mortgage). Getting the approval to sell a home on those transactions are taking upwards of 30 days. I share this information because that is for a sale of a home - so the bank is actually recouping some money right there at the closing. If it is taking over 30 days and a team of real estate professionals to get that approval - my thought is that a principal reduction to your mortgage is not a likely scenario.