My Sister is widowed and concerned.

[Joel Fraser]

The long story short is that my Brother In Law died in a car accident in March and had no insurance. My sister and 3 year old nephew are now trying to deal with bills and the mortgage. She has been a stay at home Mom and with a toddler to care for who is acting-out.The concern we have is that now she is on a fixed income of Social Security equating to a total of 1600 per month. She can work but not make more than 13k per year or the 1600 is pulled- very scarry for a high school grad with a little one to care for and no real job experience. My Brother In Law had a started a small business about two years ago and depleted savings funds for capital- she has limited savings.Her mortgage is a 30 year fixed with the first 5 years Interest Only (ending the Interest only term in about 2 years). Her payment is about 1600 with taxes and insurance but it will rise to about $1900 per month when the interest only ends. She has about 30% equity in her home (Chicago area) and for obvious reasons she does not want to sell since her mortgage broker advised that under today's lending guidelines it would be very difficult for her to be approved for even a 100k mortgage based on income!Is there any potential for a "work-out" with the lender? She has not been late on her mortgage ever and her credit is about a 620. She has no credit debt other than the mortgage at this time but they were late on a credit card a few times in the last 12 months... my parents paid off the credit card in full. There are no collections or judgements.Has anyone heard of a loan work out for a situation like this? Everything in the news and forums have more to do with sub prime and loss of equity (under water) situations. I would appreciate any insight on this subject and I'd rather move forward NOW in the attempt to improve her situation versus wait 2 years when her payment rises and roll the dice.Thank you!