Loan Modifications?

I have to admit I don't know that much about loan modifications.

I work hard to educate my clients to really examine their budgets and think about how they allocate their housing dollars. With that said, there has been some collateral damage in the housing down turn and employment is always the last to recover.

Unfortunately when the Fed bailed out the banks and told them to lend the money and ease the credit crunch, they instead went shopping like kids in a candy store.

Folks who find themselves in a tough situation because of layoffs are unable to refinance or have their loans modified.

Some would say it is just the way things go. If they can no longer afford their home, they should sell it and move on. That would work if the banks hadn't made such a mess of the economy and help send home prices plummeting. Now you can't sell and you can't stay; what's a hard working American to do?

Although simplistic, old news, I'm wondering why decent hard working folks can get some assistance from their lenders. As a Realtor, I know what homes go through during the foreclosure process. Like children in a divorce; some times people think their okay and the next thing you know a year has passed and they need serious help. Why would they risk greater losses instead of helping a family keep their home?

Like I said in the beginning I don't know the ins and outs of home loan modification; if you have some insights, please share.