When you modified the mortgage, did you sign the modification agreement and new mortgage? If you did, that means that you are obligated under the modification agreement for repayment. Yes, you can always take your name off the deed, you just have to complete the transfer documents. However, if you are obligated under a new note/mortgage and modification agreement, transferring ownership may cause the note to be accelerated and a demand for full payment can be made.
Removing your name from the deed is always possible, and people do it all the time though it usually technically violates a provision in the mortgage prohibiting such a transfer without bank approval. In any event, keep in mind that taking your name off the title will not affect your obligations under the note and mortgage, which will continue to be in effect, whether or not you are an owner on the deed.
As already pointed out, there are a number of levels to your question. And depending on what your ULTIMATE goal is, should determine HOW you proceed next! Do you want to keep the home? It sounds like you do, so I consult with an attorney to work out the best possible way to accomplish that goal, without causing an acceleration of the underlying note. And as an aside, if you found my direction helpful, and if you feel appropriate; could you be so kind as to designate my answer as the “best” answer to your question?
The bank may be offering a deed in lieu of foreclosure as a potential option, and as part of a boiler plate letter you received. If you are still current on the mortgage, it is unlikely the bank will simply "offer-up" a deed in lieu, but I've seen crazier things happen these days. If you signed the loan modification documents, you are obligated to the mortgage, whether you transfer the property or not, and if you are current on the loan, you might as well keep your name on the deed. If you just want to get rid of the property, I would suggest speaking in person with a local attorney familiar with foreclosure, loan modification and bankruptcy (not one or the other, all three). If you want out of the property, you will be discussing "deed in lieu", short-sale, or potentially renting out the property to cover the mortgage and expenses.
If you are not current on the mortgage, your credit is already in need of repair, and obtaining a mortgage in the next three years may be difficult without a co-signer or significant available asset.
Scott B. Ugell, Esq.
Ugell Law Firm, P.C.
New City (Rockland County), New York