Did you know that a loan modification could lower your FICO score?  I bet you did not know that it was considered a serious derogatory mark, in the same category as a foreclosure or short sale!   One person I know had her FICO score drop from the mid 700's to the low 600's after her lender put her on a trial loan modification.  They reported her new payment as a partial payment. 
Starting Monday, lenders have a more benign way to report government sponsored loan modifications.  Under the guidelines put out by the Consumer Data Industry, lenders should report them a a loan modified under a federal plan.  FICO – the leading provider of credit scores – will ignore this new notion for the time being.  It will neither help nor hurt a person's credit score until FICO decides how to treat it. 
If you are considering a loan modification now, please be sure to ask the lender if they will continue to report them as current during the modification period.