In: Accounting
Which one of the following statements accurately describes a home loan modification?
The seller of indebted property reduces the sales price before the close date.
Secured property is repossessed to fulfill a loan in default.
The borrower works out an agreement with the lender reducing the loan balance.
The borrower sells property secured by a loan in default before a repossession takes place.
A loan modification relates to making changes in terms of the existing loan be it change in interest rate, tanure of repayment schedule.
So, the third statement " The borrower works out an agreement with the lender reducing the loan balance' is te correct answer.
Rest of the statements given are incorrect as in no other situations given, there is any change in the loan conditions. So, correct answer is The borrower works out an agreement with the lender reducing the loan balance'