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.

Update 2020: Loan modifications are getting easier. Many borrowers are qualifying, and the mortgage companies are losing paperwork as often. Request a loan mod package from your mortgage company. Many have the paperwork online. Special relief may also be available if COVID-19 has impacted you.

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