But his government-insured mortgage had restrictions on how it could be modified and the 50-year-old Nicholson says he didn't understand his options.
The bank foreclosed in April with $220,000 outstanding on the mortgage. Today, the house is for sale for $87,000.
The federal government has pushed to avoid foreclosures through mortgage modifications. But situations like Nicholson's have become more common.
Nonprofit housing groups urge struggling homeowners to seek counseling because mortgage modifications can be complex.
Sometimes lenders are reluctant to write off part of the loan or else the terms of the loan limit what the bank can offer.