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We hear the phrase more and more often: loan modification. What exactly is loan modification?

When borrowers get in trouble, they can't make loan payments. The bank is left with a few options that are ugly for everybody. Often, the best option is loan modification.

Loan modifications allow the bank to make loan payments more affordable for borrowers. They may change interest rates, loan terms, loan balances, or other parts of the loan agreement. For a closer look, see how loan modification works.

Further reading:

November 27, 2008 at 7:17 pm
(1) beachdude says:

Loan modification mortgage is a process whereby a home owner’s mortgage is modified and both the lender and homeowner are bound by the new terms of the new mortgage. The most common loan modifications are listed below:

lowering the mortgage interest rate
reducing the mortgage principal balance
fixing adjustable interest rates within the mortgage
increasing the loan term throughout the mortgage
forgiveness of payment defaults and fees
or any combination of the above

Check out this Public site at http://LOANMODIFICATIONMORTGAGE.ORG

March 10, 2009 at 2:25 pm
(2) Mike Wasdin says:

As you may expect, home mortgage loan mitigation is not a one size fits all endeavor. The universe of possible solutions is vast. Always use an attorney for ALL loan modifications that will thoroughly review your circumstances and desires before recommending a course of action. Your financial circumstances, existing loan documentation and legal rights should always be reviewed and considered. An attorney will work with you to achieve a solution which fits for you and your family. While other organizations may simply submit a loan modification request, which may be ignored by the lender, an attorney will actively and aggressively negotiate the most advantageous solution for their clients.

March 11, 2009 at 7:46 am
(3) roadrunner says:

As the economy is passing a tough time, it is obvious that more and more people with face problems in handling their debt. It is a relieve that few financial institutions are there to help those people. There are several websites too that assist people to come out from the housing debt burden. http://www.editmyloan.com/ is one of such sites.

March 30, 2009 at 4:59 pm
(4) Mark Zuckerman says:

My loan modification experience was very interesting I would say. Some good and some not so good how ever its my experience. Well I had no idea what a loan modification was, and my adjustable rate mortgage was about to adjust to a higher rate which would make it impossible to afford my payment, so I decided to look into this modification thing and I contact about 4 companies and 3 of them told me that I would have to be behind on my payments before they could help me. Something did not feel right about that, I work really hard to keep my credit in a good standing so then the last company I found online told me I did not have be behind on my payments, and yes I was really confused, so I decided to some more research and Callie Thompson my loss mitigation case manager gave me the LOWDOWN on what was going on, the first 3 companies I talk with did not legally stop the foreclosure process and they did not have attorneys working on my behalf. And that was the reason I would have to be behind because most loan modification companies just have you fill out a hard ship letter and send it to the bank with out actually negotiating. Hell I could have done that, bottom line do your research before going with anybody!!!!

May 8, 2009 at 2:51 pm
(5) arkansas says:

what is payday? :)

May 16, 2009 at 8:01 pm
(6) Loan Modification says:

Loan modification seems to really eat through a lot of money in everyone’s budget, the banks, the homeowner, advertisers, etc.

Some times I wonder if it is even worth all the trouble.

I love your stuff by the way Justin. Keep it up bud!

Hey if you want a link or something just trade with tips for my blog http://www.stopourforeclosure.wordpress.com


May 24, 2009 at 6:12 am
(7) Make Home Affordable says:

I am really counting on the Obama loan modification plan known as the Make Home Affordable Plan to help Homeowners obtain mortgage workout agreements such as a mortgage refinance or loan modification. I just don’t know if there is much else out there for homeowners struggling to pay there mortgage if this does not work. I just don’t know.


May 31, 2009 at 5:55 am
(8) zarak khan says:

You need to save your home but your lender is asking for too much money. You’re not asking for them to forgive the loan but you need help creating a payment plan that you can handle. You just need someone on your side to negotiate with your lender to get you back on track that is where we come in.
As the economy is passing a tough time, it is obvious that more and more people with face

problems in handling their debt. It is a relieve that few financial institutions are there

to help those people.
Whatever the difficulty, we understand how it feels to choose between a mortgage payment and groceries. We understand what it’s like to have continual phone calls from your lender … calls at home, calls at work and letters in the mailbox.

June 6, 2009 at 12:59 pm
(9) TOdd says:

Hi there, my name is Todd i am currently working with Elite Loan Modifications and we are doing so good in business. I have been getting people payments much more affordable with new low interest rates, if anyone was behind we brought them current. Also i’ve gotten a few principal reductions as well.
If anyone needs help shoot me an email at: tahmed19@gmail.com

July 16, 2009 at 7:23 pm
(10) andrew says:

I just had a remodification done. It took a little longer than I expected and I was VERY worried about spending the money up front. I had to borrow some of it and most of the rest went on my credit card. I took a leap of faith and things turned out very nicely. $181,996 was my loan amount for my house here in Fresno, CA – after 9 weeks my balance was lowered to $145,597. My monthly payment was a little over $1,465 and it was reduced to $395 a month – by 2015 it will be at $695 a month, but I’m fine with that, it gives me some time to get back on my feet and my payment will still be very managable for me.
I worked with the guys at Verdi Law Group and am VERY VERY thankful for how they’ve changed my life! I told them I’d be telling EVERYONE I can – so, here I am. If you’re in a tough situation like I was and losing your home just can’t be an option, then I’d suggest calling them 1(866)400-1694 – I worked with Ara and would love to repay him and his team by sending him all the people I know who also need help! Good luck!

July 16, 2009 at 8:16 pm
(11) andrew says:


September 22, 2009 at 1:34 pm
(12) John Smith says:

Like many we waited in anticipation of the outcome of the Trial Payment Period plan of the loan modification workout

package. We were hopeful as they presented us with a an affordable trial monthly mortgage amount and explained that

our new payment may be just as close to this amount after the trial payment period has been completed and approved.

Well, low and behold we were approved for the Loan Modification thru Aurora Loan Services. We were so thankful &

excited when we found out and we actaully felt relieved, like a weight lifted off our shoulders. But that was short

lived as we looked thru the approved workout package and realized what they had done to make the loan amount more

affordable. And that being the key word “Affordable”. The actual loan modification breaks down as a catch 22. Yes

they reduced our monthly mortgage amount but here is what they did to get that amount to a target that we needed to

be in, in order to afford the home.

1) They Reduced our APR to 2%.
2) They extended our loan term to 40 year fixed.
3) They added all monthly payments in arears to the end of the loan.
4) They kept the loan amount the same, no reduction here.
5) They adjust the principal mortgage amount to the current marke value.

This experience is like buying a new car, they only ask you what your target monthly payment needs to be and they

make some interesting financial juggling to make that happen. They don’t actually reduce the price of the car, they

simply extend the terms, try to get you a lower rate, and possibly have you increase your down payment. It’s a well

proven system and scam that works well and has done so for decades. So now we are wondering if we should still seek

a short sale and take the loss. Because if our loan balance was never reduced to the current market, the we will

continue to pay a mortgage that builds no equity, no value, and no incentive other than to keep the roof over our

heads. We are still in a home that is worth only a 1/4 of what the loan balance currently is. Even with this loan

modification the loan amount vs the home value are still upside down. Perhaps our lender is using smoke and mirrors

and is not playing by the governments plans. Right now my wife an I feel empty inside. Let down once again by these

corrupt banking & financial institutions.

Our administration needs to be made aware of this new twist on bad loans and bad loan modifications. If anyone else

has any new info they can share regarding what is happening with their modification I’d love to hear it. Good luck

on your end.

Mr. Upside Down

November 19, 2009 at 9:53 am
(13) Stanley G says:

Good point of vew.
I’d like to propose you a quotation from my article about Modification of Mortgage Loan:
Following are the options that are provided by the modification Loan to reduce your monthly payments:

1. Late fee payment charges will be lowered
2. Reduce the interest rate on the availed mortgage loan
3. Extend the term of your mortgage loan
4. Reduce the principal due to the lender
5. Convert your adjustable rate to a fixed rate
6. Sometimes waives off the second mortgage

This is my vision on the point. Full story at http://samedaypaydayloan2009.blogspot.com/2009/10/modification-of-mortgage-loan-learn-how.html

March 26, 2012 at 8:01 am
(14) Adam says:

A mortgage loan modification is when the mortgage lender agrees to modify your existing mortgage in order to keep you in your home in lieu of your hardship. The mortgage note modification purpose was designed to help make your current loan more affordable.

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