A loan modification is a change to a loan contract agreed to by both the lender and the borrower. The lender agrees to modify an existing loan in a time of documentable hardship. The ultimate goal is to make the loan affordable for the long term. Loan modifications often come in the form of rate reductions, fixed interest rates and a rewriting of the loan to accommodate missed payments. Loan modifications are generally given to borrowers when they are behind on payments and have documentable hardships, such as loss of employment, illness or death in the family.
Loan modifications often result in tens of thousands of dollars in additional costs to homeowners. Banks provide loan modifications to benefit themselves, not homeowners. Don’t sign one without legal advice. Read about other options for Foreclosure