Indy Bank - loan mod or file for predatory lending practices claim -help!

[Joel Fraser]

My parents, Spanish-speaking only, were swindled by a mortage broker in August 2007. The broker took 5,500 and left my parents with a interest only loan (7%) for five years; in 2012 it will jump to 12% for another 5 years (interest payment only); then the loan will go to a variable rate (interest and principal) for the next 20 years. The loan has a pre-payment fee (6 months of interest). My parents only get a combined total of $1544 from social security. The loan was approved without verifying their income. On their behalf, I have filed a formal complaint against the broker and called Indy Bank to find out why they did not verify income prior to approving the above loan. I told them that I was also going to report them for taking advantage of senior citizens on a fixed income. My parent's are not delinquent on their loan. They are on a tight budget and make every payment. I am know overseeing this and have full authority to make decisions on their behalf. For a fact, I know that when their loan adjusts, they will be in trouble. I send them money every month and that is why they haven't sunk. After reading all the posts on this site, I am thinking that applying for a home modification is the best solution at this time. I am working out their budget and have already typed out a hardship letter (used examples found on this site). The Indy Bank representative stated that we may want to consider waiting until October or until they can't make their payment. I don't think this is wise but would like to hear another perspective. Will we have difficulties getting a loan modification if not delinquent? If they have at least 250 dollars left a month after all expenses, I will not show my "gift-aid" on their budget BUT if they do not have this left over, should I include what I send them per month or just reduce their expenses?Should I try to re-finance and be a co-signer?Should I go after a loan modification or follow the "predatory lending practices" claim as a means to get reasonable loan terms?Are there other options that I am missing? Thank you in advance for any words of wisdom you can share.