A loan modification is a formal agreement between a borrower and lender to change the terms of the loan in order to bring the loan current or keep it from defaulting by making the payments more affordable to the borrower. This is done through modifying the terms of the mortgage – interest rate, duration, or sometimes the principal amount. Contrary to popular belief, it is not only for those borrowers who owe more than the property is worth. Any homeowner that finds his mortgage payments unaffordable is a candidate.
See the article here:Loan Modification – What it is and Where You Start
