A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, which allows the loan to be reinstated, and results in a payment the mortgagor can afford.
Loan Restructuring is an important part of the foreclosure defense process and is the preferred option for those seeking to keep their home. Loan Modifications typically involve a reduction in the principal balance, interest rate or an extension of the length of the term of the loan. In some cases a different type of loan or any combination of the three. A lender might be open to modifying a loan because the cost of doing so is less than the cost of Default or Foreclosure.