Arrears – back payments that many seem insurmountable to a borrower – can be rolled into the mortgage principle as a means for a homeowner to play “catch up” on his or her loan.

This is one of the potential outcomes of a loan modification plan. Most homeowners don’t realize that a bank is willing to shuffle the decks, so to speak, in stop foreclosure from happening to a homeowner.

Why? Banks hate to foreclose on property. It takes time and money to do so, and even the loan officers, hardened by the realities of the current economy and housing and lending meltdown, find it psychically draining.

An example would be couple A, suffering a reduction in income simultaneously to their ARM increasing monthly payments by $900 at a 9.75% interest rate. They struggle at first to manage it, but when other unanticipated expenses come along they fall first one month, then two or more months behind in their mortgage payment. Their property taxes are paid in escrow through the mortgage, so that then gets behind also. After about 18 months, they are facing foreclosure with $13,800 owed to the bank and their county assessor.

A loan modification team of lawyers, financial and real estate experts negotiating with the bank on behalf of the homeowner, is able to prove the couple could keep up payments if the interest rate were lower and the $13,800 debt is folded into the principle due. The bank agrees, and everyone emerges from the situation in better condition. Anyone looking for foreclosure prevention should consider this path, most probably through engaging a loan modification firm.