A loan modification refers to a lender agreeing to alter the terms of a loan, which can be in the form of interest structure, interest rates, term of loan, or a combination of them.
This process is often initiated by borrowers who are facing financial hardship resulting in payment problems.
They can be close to defaults or already defaulting.
Sometimes homeowners have conversion clauses in their mortgage contracts that can solve the problem, but are unaware of them.
And when the approach the lender for loan modification, their loans are converted while they think that their loans are actually modified.
When one is predicting financial trouble ahead, it is best to go talk to the lender before the mess hits.
Waiting till delinquency becomes reality just puts the borrower in darker light.