A lot of the answers you've received talk about the 31% goal, however, assuming the information you provided is correct, it's clear to me that your loan servicer made you an offer based on a traditional or what they call an in-house modification. That modification would be based more on affordability, rather than simply 31% of your gross monthly income. A HAMP modification might be more attractive to you, and will typically reduce your interest rate down to 2%. I do agree with everybody else that it would be wise to consult with a GOOD lawyer, one who will not only litigate hard, but also assist you with the modification process (assuming a modification is what you want). Foreclosure defense lawyers are often not as expensive to hire as you would think. Good luck to you.