As with a loan modification a mortgage modification is a mortgage that has had the original terms of the agreement changed which has been agreed by both borrower and lender. When the mortgage terms are drawn up when the initial agreement is made it is assumed that the borrower will be able to keep up their mortgage repayments but this is not always the case, and when this happens the mortgage can be modified as long as the lender agrees to this request.
When a mortgage is set in place the interest and principal payments are made until they are paid off or in full. Until the mortgage is paid off completely the lender still has the right to the property in accordance with the law. Therefore if the borrower decides that they want to sell their home before their mortgage is paid in full, any money that the borrower gets from the sale must be paid to the lender so the original amount of money they borrowed is paid back, once this has happened the lender then releases the lien they have on the property, which allows the new owner of the building to own it outright.
Depending on the way you see things any change to an original mortgage agreement is considered a mortgage modification, because the original terms have been changed one way or another. But the way in which mortgage modifications are seen in general is a change in the terms of the mortgage specifically applies to the borrower’s inability to keep up with their repayments which are stipulated in the contract.
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