A loan modification occurs when a lender agrees to change the terms of a loan with a borrower. In the current--not just in Portland but pretty much everywhere in the U.S.--that means trying to figure out a way to reduce the borrower's payment.

What should a borrower expect?  First, not all lenders will modify your loan. Procedures vary not just from lender to lender, but even WITHIN a lender. Wells Fargo may treat customer A very differently than customer B.

Not only is there not a standard set of guidelines, the extra staff lenders have hired are not particularly well trained. Worse, these people are overwhelmed right now.  This means borrowers requesting loan mod's must be very patient.

The lender will require you to complete financial forms, where you describe your income and debt. Sometimes other narrative, such as a hardhip letter, is also required. You, the borrower, provide all this, and then you wait. And wait. And wait. At times, it will seem like the lender had forgotten you.

Worse, sometimes they do forget you. Your only defense is to keep calling, even at the risk of making a nuisance of yourself. One woman told me that she was still wating on an offer her lender, Washington Mutual, had made her in January--ten months ago. She kept being told her equest was being processed. This situation can be very stressful.

The goal for the lender is to get your payment somewhere around 31% of your monthly income. SOmetimes, the offers they come back to you with will make you wonder if they're o the same planet as you.

Loan Servicers have not been at all consistent in making loan modifications. That's because it's not their loan. They service it for others, and if your loan has been fractionalized, it might have dozens of owners, some of whom don't want to do anything.

Some big lenders like B of A or Wells are lenders on some loans and servicers on others.