Loan Modification

What Does Loan Modification Mean?
A modification to an existing loan made by a lender in response to a borrower's long-term inability to repay the loan. Loan modifications typically involve a reduction in the interest rate on the loan, an extension of the length of the term of the loan, 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.

Investopedia explains Loan Modification
A loan modification agreement is different from a forbearance agreement. A forbearance agreement provides short-term relief for borrowers who have temporary financial problems, while a loan modification agreement is a long-term solution for borrowers who will never be able to repay an existing loan.

Filed Under: Personal Finance, Real Estate

Related Terms

Deed In Lieu of Foreclosure
Delinquency Rate
Delinquent Mortgage
Forbearance
Foreclosure
Heatmap
Home Affordable Modification Program - HAMP
Hope Now Alliance
Mortgage Forbearance Agreement
Workout Assumption
More Related Terms

Related Links

Short Sell Your Home To Avoid Foreclosure - Are you in danger of losing your home? Protect your credit score with a real estate short sale.
Make A Risk-Based Mortgage Decision - Find out how to choose which mortgage style is right for you.
Find The Best Mortgage Rates - Search and compare the best fixed and adjustable mortgage rates in your area with Bankrate.com. Click Here!
Mortgage Asset-Liability Management Made Easy - Should you refinance your mortgage to purchase other assets? Learn how to weigh your risk.
How Will Your Mortgage Rate? - Learn how interest rates affect the housing market and how you can keep up with changes.
Understanding Your Mortgage - We walk through the steps needed to secure the best loan to finance the purchase of your home.
Battling Foreclosure: The HOPE NOW Alliance Strategy - Hope Now was formed to help prevent foreclosures. Are the organization's strengths enough to overpower its weaknesses?
Things To Know About The Home Modification Plan - This program allows FHA borrowers to reduce monthly mortgage payments through negotiation with lenders.
Short Sales And Foreclosures: When It's Time To Move On - Sometimes it's better to cut your losses, but foreclosures and short selling can have devastating impacts on your credit score.

Rate this Term: Your Rating: Overall Rating: Vote Now!