Loan modification firms are changing the game for banks in how they work with distressed homeowners. In thousands of cases across the country, it’s a story of David beating Goliath because the homeowners’ special weapon – experts in home lending – are doing the fight for them.

Here’s how it works: The homeowner under pressure from a bad mortgage (often an ARM that jumped monthly payments, or a home “under water” because the amount owed on the loan is greater than the home’s current value) may lack the knowledge to approach a bank on their own, and may be intimidated by the terminology of banks. So they hire a loan modification firm for their expertise and skills – at mortgage law, real estate and financing – to do the work for them.

Borrowers generally pay a fee of $300-$400 for this service. In successful cases, that can equal the savings in the first month.

Loan modifiers are successful due to a major, underreported fact facing banks. That is that banks lose in foreclosures. They lose a customer from whom they expected years of income. They get stuck with a property to manage. And they have to figure out how to sell it in a depressed housing market that may not turn around for months or years into the future. Modifiers are so familiar with various banks’ specific positions and circumstances that they should be able to provide a money-back guaranty to clients, creating a no-lose proposition for borrowers.