Hi jad9412. Your story sounds so familiar, so many people are having the same problems whith their mortgage company claiming they want to help and then use various reasons, to tell people they don't qualify for anything. I don't understand why they are telling you that you don't qualify for a reduction, since you have less of an income now, one would think that would be all the more reason for a reduction. The mortgage companies got bailed out, but they are not keeping up their end of the bargain.
Have you tried the Hope for Homeowners Hotline? If not their number is 1-888-995-HOPE (4673). Also, have you tried a refinance through a reputable lender? I wish I could give you some bette answers, but it seems like at every turn, some of the lenders are making it more and more difficult for people to stay in their homes. You can read about stories similar to yours at consumerwarningnetwork.com, also you can check out ripoffreport.com and type your mortgage company's name into the search bar...i bet you will see plenty of stories from people going through the same thing.
The only other thing I can tell you that might help is if you call your State Attorney General's office and explain to them what is going on with your lender, maybe they can help or at least point you in the right direction as to where to get some help.
Best of luck to you dear.
AOL Health