Hello,A Loan Modification is when your bank changes the terms of your loan. This is usually done in efforts to aid you in a bad situation. For example if your mortgage payment is XYZ a month and you have fallen ill or been laid off, you bank may give you the option to suspend payments for a period of time or pay only 1/2 for a pre-determined amount of time. This allows you the chance to get back on your feet. They may add 1 year or 6 months to the 30 year term of your loan. Sometimes a bank is willing to lower your payment based on the value of your home in today's market vs the value of your home when you purchased it. It all depends on the bank. I have seen lots of modifications in today's tuff market.