Loan Modifications

Loan modification programs should be a bottom-up approach designed to balance the needs of all parties, and we are encouraged by the progress being made by the industry in advancing such programs. Loan Modification - A written agreement that permanently changes one or more of the original terms of the loan, including the interest rate, payment, maturity date, or the amount of the unpaid principal balance. A modification can cure the default by capitalizing the arrearage and/or reducing the monthly payment to an amount, which is more favorable to the borrower. Loan modification programs will provide payments within the limits of an Affordability Equation set out in the agreement, with a payment target of 34% of the borrower’s household income.