Loan modification

"What is a loan modification, and how will I know if my loan gets modified?"

A loan modification occurs when a borrower gets behind on their mortgage, and the mortgage company "modifies" the original terms of the loan. Usually, they will take the delinquent principal, interest, and other fees due and add them to the loan balance. They will then re-amortize the loan and the borrower will have a new payment amount and new loan terms. This is usually done to avoid foreclosure.