Loan modification agreement
A loan modification agreement is simply where two, or possibly three parties agree on the terms of a loan modification together.
The first party that will always be their no matter what is the homeowner. The homeowner simply can no longer afford to make the payments he or she is making each month on their house. Yet they do not want to lose their home. So they decide to take a smart, sensible, responsible solution and look into a loan modification. It will not be an easy road for them by any means, but if it is used in the right situation and everything goes as planned, everything should work in the end.
The second party in the lender, which is usually a bank or at least a financial institution of some kind. The lender wants the loan to be modified because the other option, foreclosure, is not very appealing for them. Banks lose out of foreclosures because they have to sell their property, a home, at a steep discount. Receiving payments from the homeowner, even if they are lowered, will work out best for everyone in the end most of the time.
See, loan modification agreements are not too hard to understand.