Thank you for posting a great question. And from Glendale, too!
When a homeowner has a problem making their mortgage payments, a couple of issues come up.
Usually something happens that causes a gap between how much money you have and the amount needed to make your mortgage payment. Sometimes it is the fact that the mortgage had a "teaser" rate that adjusts to "market rate", and for some people that means their mortgage payment doubles.
For other people it is commonly job loss, death of a family member, medical bills, and divorce.
The first question is "do you want to remain in your home?". Asking a lender to modify the terms of your loan is a good route to follow if you think you can handle the payments if they are lower. Some lenders will cooperate, some will not. You will need to document your income, sort of like applying for a loan.
If you are going to be unable to make even a reduced mortgage payment, then a short sale is the next option. This occurs when you sell a property and the proceeds from the sale will not cover the mortgage payoff and closing costs. In this case you need to make a case to the lender that your financial situation has changed and although at one time you did qualify for the loan, due to circumstances beyond your control you are no longer able to make the payments. The BESt solution for the lender is to allow you to sell the home at a loss. This means that they lender will take a loss of probably 10-40% of the loan value. That is a big loss, so they ask for a "hardship letter", also a financial statement so they can see your liabilities and assets.
Some lenders will agree, some will not. If they do not agree then foreclosure is the last step.
I would be happy to answer any other questions you may have, you can contact me via my Trulia profile.