Unfortunately many people are in this same situation. The issue is that many of you lack the right legal representation guiding you in the right place. I work for a non-for-profit association that has a network of attorneys that specialize in this type of litigation - the HLAA - Homeowners Legal Assistance Association ) . Do not think you can do these things on your own that easy ! You need legal help , it is a legal contract you are trying to negotiate. If you send your documents on your own , you risk not only a denial the first time around , you may risk future progress to get you into something you can afford. If you are looking to modify or fight a foreclosure get a lawyer. If you cannot find one or cannot find one that is affordable feel free to contact me anytime @ js@hlaalaw.org

Hi Roger!
Here’s a list of programs that are either operated by the U.S. government or have its seal of approval:

To find a counselor, contact the U.S. Department of Housing and Urban Development (HUD) at (800) 569-4287 or (877) 483-1515, or go to http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm
Call (888) 995-HOPE, the Homeowner’s HOPE Hotline to reach a nonprofit, HUD-approved counselor through HOPE NOW, a cooperative effort of mortgage counselors and lenders to assist homeowners.
Visit NeighborWorks America’s Web site at http://www.nw.org/network/home.asp
Go to this Web site for information on federal mortgage modification and refinancing programs: http://www.makinghomeaffordable.gov
The Controller of the Currency’s consumer information site for banking-related questions is http://www.helpwithmybank.gov
OCC Customer Assistance Group and consumer assistance site: http://www.occ.gov/customer.htm
Federal Trade Commission: http://www.ftc.gov/bcp/edu/pubs/consumer/homes/rea04.shtm
Federal Reserve Board: http://www.federalreserve.gov/pubs/foreclosurescamtips/default.htm
NeighborWorks America: http://www.nw.org
HOPE NOW: http://www.hopenow.com

Source: Controller of the Currency (04/21/2009)
Hope this information is helpful to you. If you wish to contact me, email me directly at:
dworkman@sccoast.net

Sincerely,

Debbie Workman
Prudential Burroughs & Chapin Realty, Inc

Roger,

Before you give up, I would recommend that you contact HOPENOW.com, they are a HUD approved counseling agency that are there to assist distressed homeowners.
From my basic knowledge, you do need to show the bank why you need to have your loan modified. You must be able to show hardship in writing, and supporting documentation, e.g. paystubs, bank statements, jobloss letter, and current expenses.
Good Luck with this process.

I would suggest that you contact a couple other mortgage lenders/brokers to get their professional opinion on your situation.