Let me be the first to say, talk to some of the more experienced realtors first, THEN talk to an attorney. Your questions will be more focused on your particular circumstances, I think, than just meeting with an attorney looking for general knowledge. Here's some basic information that might help get you started:
* First, almost 74% of homes in Sacramento are worth less than what is owed. That's not a reason to ask for a loan modification. It's like stocks. The only value that matters is at the point of purchase and the point of sale. If you don't need to sell, don't. But the lenders aren't giving you a loan mod because your house is worth less. On the reverse side, if your home was worth more, would you be willing to give the lender half of your profits? The contract is as the contract was written. If you need to alter that contract (your trust deed), there has to be a compelling reason for the lender to want to do that.
* Your mortgage is owned by an investor or group of investors. Most often Indymac, or whatever lender is working with you on your mortgage, is the servicer, working on behalf of the investor. They must get approval from the investor to accept less than what is owed. So understand, if you owned a mortgage as part of your investment portfolio, you'd need a compelling reason to accept less than what is owed. Which leads to the third, most important question, that will help you compel the lender and the investor to work with you on a loan modification or short sale.
* What is your hardship? If you go to http://www.makinghomeaffordable.com,
they actually specify it as one of 4 boxes to check. Loss of income; reduction of income; divorce/death; or other. Without a real hardship, the lenders will not negotiate.
* Last, you must negotiate by sharing your financial information. They are looking for a specific ratio to determine if you can qualify for a loan modification, or should consider a short sale instead. Rarely,( as of Feb 2011) are lenders offering a reduction in the principal balance as part of their loan modification.
While Indymac is more difficult than many others, they are still trying to decide- what is their better alternative? Despite some of the rumors on One West's practices, no bank prefers a foreclosure to working out an alternative if you really can demonstrate a hardship. Don't arbitrarily stop paying your mortgage without getting more education on the best alternative for you. Because if you do short sale, right now you will not qualify to buy another house until 2 years PLUS the number of months that you were delinquent on paying your mortgage. For most people that's really closer to 3 years with the current FHA policies.
I work as both a home retention consultant as well as a realtor. As a home retention consultant I offer a free one hour consultation to review more deeply the points made above. At the end of that conversation, if it's determined that you have a good position to negotiate a change in the loan with your lender, we will call them and get that started for you, call various resources to answer your tax or legal questions, and develop the strategy best available to you.
No matter what way you go, the ultimate answer lies with your lender. It will take good negotiation skills to compel them to change an existing contract.