there is no exact way of getting "modification". If they want to stay in the home then call and call and call again. Keep a journal and write down, name, time, date.
If you send in documents, do it so someone has to sign for it. or if fax documents, call later that day to see if they received it, or the next day. You can never, ever call too much.
If they had to have mortgate insurance when they bought the home or if they have it on their current loan then call the mortgage company and see if they can help. If your brother wants to stay in that home, then see if they can help. And again, they might not get the answer from the 1st or 2nd or 3rd call.
And if it is better to walk away that is ok also. *** If it is true they bought a come the couldn't afford, then the lenders should have known that. **** the lenders flooded the market with ads that everyone needs to buy a home and that if you didn't own a home you basically were ignorant and a fool because you better off if you owned one. The lenders were the professionals.. they were the ones that looked at people's income (or they should have ) and work history, and credit to say if qualified. So I don't blame your brother.
Yes, they will be able to rent if the walk away. One way to build up credit is to get a "secured" credit card after the foreclosure or bankruptcy and it will improve their credit.
Maybe complexes or property managment firms want great credit... many independent landlords are ok with people who lost their homes to foreclosure.
I don't think anyone should just walk away. Stay in that house as long as you can till they toss your stuff out. and that could mean 1 year or 3 years or more. They have to give you at least 6 months from the sheriff's sale and if they file bankruptcy just before the 6 months then they will have more time in there. If they had a 2nd mortgage on the home then make sure they use an experience foreclosure lawyer/bankruptcy lawyer because the 2nd mortgage is different and it can follow you if the foreclosure or short sell doesn't indicate the 2nd is paid off.
by the way. Lenders see short sale and foreclosure as the same if you want to buy again. So don't stress over that.
If you have a progressive State Rep or Senator call their office also, and see if they can help and it doesn't hurt that they hear complaints of trying to work with your lender.
The rates for 30fix FHA is around 3.75% refi and conventional is around 4.125%... so that can save quite a bit if you are at 5% or more. There are programs coming out all the time and things change so if you brother didn't qualify because of 4 months late, it could change..
and if none of that works.. then try NOC. and Occupy Homes. if more people fought back then banks would do more to renegotiate loans.
http://www.mnnoc.org/
https://www.facebook.com/OccupyHomesMN
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