Summary: A loan modification is an agreement between the borrower and the lender. The agreement terms vary widely. Some loan modifications can deal with past-due payments. Others can extend the time to pay the loan, lower the payment, lower the interest rate, or even forgive a portion of the balance.
Some lenders participate in loan modifications, and some do not. Certain laws and government programs apply, but applying for a loan modification does not guarantee that you will be approved. Those who have attempted on their own to get a loan modification know that this process can be a paperwork nightmare. It is quite common to hear stories of mortgage companies “losing” documents half a dozen times over several months only to send out a foreclosure notice. The best thing a borrower can do is keep a copy of everything that is submitted.
Available loan modifications will vary in the relief offered. Modifying the loan will depend on the type of loan, how far behind you are, and the hardship you have experienced. Forbearance (temporary pause of payments) may also be available.