Loan Modification

A written agreement in which the lender or servicer agrees to permanently change the terms of your loan. The possibilities are endless but generally loan modification may involve changing your interest rate, the length of your loan, a reduction in the amount you owe or a combination of one or more of the foregoing.

From the lender's standpoint, any loan modification plan must be based on a realistic calculation of your financial ability to make payments without falling into default again. From the borrower’s standpoint a loan modification only makes sense if you can afford the reduced payment schedule.


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