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A loan modification is when any changes are made to the term of a loan between a lender and borrower. Often, if a borrower is having problems making a payment, the lender is willing to adjust the terms of the loan because the bank does not want to be stuck with an outstanding loan.
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Loan modifications make it more feasible for borrowers in a financial crisis to make their loan payments. Often, adjustments are made to the interest rates, terms of the loan, balances on the loan, or another aspect of the loan payment.
Why would a bank offer loan modifications?
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