I read somewhere that you could use mods on an item that were stored in your bank, (so you dont have to carry around a bunch of mods or go back to bank, ship etc..) I was looking at a moddable piece and see no available mods in my inventory. Was I imagining this?

You can craft using items in your ship's cargo hold. Could that be what you're thinking of?

Yes, thats it but if I"m elsewhere in the world and decide to mod an item, should the mods in my ships cargo appear in my inventory?

As far as I know it only works with crew skills, not with item modification.