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Loan Modification

A modification is a change to the mortgage’s terms from the original contract (when the mortgage was first taken out). These changes are intended to fix the borrower’s delinquency (lateness) and any arrearages (past-due amount, fees, etc.). A modification can involve any one of, or a combination of, the following options: Reduce monthly payment, extended term, reduced interest rate.

A recorded loan modification is a legal change to the terms of the loan and involves getting approval from the lender or investor and mortgage insurer. Some options for a loan modification include:

Repayment Plan
This payment plan is designed to spread out repayment of a past-due balance over a longer period of time. The repayment plan takes into account how much you can pay based on your current financial situation and does not change the original terms of the Loan.

Forbearance Plan
Forbearance is a temporary lowering of a mortgage payment (through partial reduction or total suspension). Typically, any arrearages (past-due amount, fees, etc.) because of the forbearance will be repaid after the underlying reason for the borrower’s hardship has been resolved.