There are few good questions on the following link to the Hud website.
Loan Modification Frequently Asked Questions - HUD: "Loan Modification
Frequently Asked Questions
A Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.
Question 1: In utilizing the Loan Modification option to bring an asset current, can the mortgagee include all fees and corporate advances?
Answer: Mortgagee Letter 2008-21 states in part: Legal fees and related foreclosure costs for work actually completed and applicable to the current default episode may be capitalized into the modified principal balance.
Question - Many people wish to negotiate a loan mod without going into default on their loans. Can a homeowner be current. The only way to really find out is to try. Many lenders want the borrower to be 60 days late before they will negotiate. However, there are exceptions.
Before you go into default you should consider all your options.