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Modification
Modification is simply a revision of the terms of a loan contract. The modification can include changes to the length of the loan, the annual percentage rate, principle balance and security or collateral requirements. A loan modification can be initiated by the borrower or lender and become binding only when the new terms have been mutually agreed upon in writing. Home loan modifications are a valuable resource for homeowners going through financial hardships as well as for the mortgage lender. Homeowners who are struggling to make their monthly mortgage payments or have fallen behind can request an interest rate reduction for a lower monthly payment as well as a forbearance or repayment plan for the missed payments. A simple restructuring of loan terms can make monthly mortgage payments more affordable, which means that struggling families will be able to continue to make their mortgage payments and stay in their homes. It is far more beneficial to mortgage lenders to receive continuous payments than incur the additional expenses involved with the foreclosure process.