# Loan modification

> A loan modification permanently changes your mortgage terms, such as the rate or term, to make the payment affordable. How it works and federal timelines.

URL: https://mail.mortgage-math-us.com/glossary/loan-modification/  
Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team

## Quick answer

**A loan modification** is a change to your mortgage’s terms — such as extending the years you have to repay, lowering the interest rate, or forbearing or reducing part of the principal — that the servicer agrees to so the payment becomes affordable and you can keep the home.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Servicer must decide on a complete application within | 30 days | [12 CFR 1024.41(c)(1) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) | Oct 29, 2026 |
| Applies to applications received more than this long before a sale | 37 days | [12 CFR 1024.41(c) and (g) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) | Oct 29, 2026 |
| No first foreclosure filing until the loan is more than | 120 days | [12 CFR 1024.41(f)(1) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) | Oct 28, 2026 |

## Example: two ways to lower the payment

You owe $250,000 at 7.24% with 25 years left, so the payment is $1,805.

- **Longer term.** Stretching the balance over 40 years at the same rate cuts the payment to $1,597, saving $208 a month — but adds about $225,105 of interest over the life of the loan.
- **Lower rate.** Cutting the rate by one percentage point, with the term unchanged, brings it to $1,648, a saving of $158.

Run your own figures through the [mortgage payment calculator](https://mail.mortgage-math-us.com/tools/mortgage-payment-calculator/). Many modifications also add missed payments to the balance. Make sure you understand the new payment and the total you’ll owe; if you still can’t pay after a modification, you may lose the home.

## How the review works

Apply through your [servicer](https://mail.mortgage-math-us.com/glossary/mortgage-servicer/). If your complete application arrives more than 37 days before a foreclosure sale, federal rules require a written decision within 30 days, and the first [foreclosure](https://mail.mortgage-math-us.com/glossary/foreclosure/) filing generally can’t come until you’re more than 120 days behind. Servicers often start with a trial payment plan. Never pay a company upfront to get a modification — housing counselors help for free. If keeping the home isn’t realistic, compare [forbearance](https://mail.mortgage-math-us.com/glossary/forbearance/) and a [short sale](https://mail.mortgage-math-us.com/glossary/short-sale/).

## Sources

- [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- [12 CFR 1024.41(c) and (g) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) — Loss mitigation protections apply to complete applications received more than this many days before a foreclosure sale; Servicer must evaluate a complete loss mitigation application and send a written decision within; Servicer cannot make the first foreclosure notice or filing until a closed-end mortgage is more than this delinquent (Oct 29, 2026)
- [CFPB: What is a mortgage loan modification?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-mortgage-loan-modification-en-269/)

_General information, not financial advice._