What Does Mortgage Loan Modification Mean?

A mortgage loan modification to an existing loan made by a lender in response to a borrower's long-term inability to repay the mortgage. Loan modifications typically involve a reduction in the interest rate on the mortgage, an extension of the length of the term of the payment, a different kind of loan or any combination of the three. A lender might be open to modifying a mortgage because the cost of doing so is less than the cost of default.