A loan modification is an agreement between the lender and the borrower to modify the terms of the loan (usually lowering the monthly payment and/or the interest rate). There is no requirement for the lender to modify the loan. In general, a loan modification is a voluntary restructuring of debt by the lender to make it possible for a borrower to remain in the home and to make payments to the lender under new terms. A borrower must demonstrate hardship in order to qualify for a loan modification. The lender must be willing to voluntarily modify the loan after reviewing the borrower’s application. In most cases, in addition to past hardship, the borrower must demonstrate the ability to make payments to the lender before a loan will be modified.