What is a loan modification or loan mod?
A loan modification is where the lender or bank agrees to modify the terms of a promissory note. A lender or bank may modify a loan by reducing the interest rate, increasing the term of the loan, reducing the principal balance, or a combination thereof.
Beware of companies that offer assistance with loan modifications. In Florida, it is illegal for anyone other than a lawyer or a law firm to receive money up front to assist with loan modifications.
Do I need to be delinquent for the lender to work with me?
The short answer is yes. However, some lenders do work with borrowers who are not delinquent. Additionally, some government-sponsored programs require borrowers to be current on their payments. It is also important to understand the implications of failing to make payments under a promissory note. Failing to make payments is breaching a contract to make such payments. It will likely have significant negative consequences to a borrower’s credit rating.