Finance
What is a loan modification and how does it differ from a refinance?
AThey are identical processes
BA modification changes terms of an existing loan without paying it off; a refinance replaces the existing loan with a new one✓ Correct
CModifications are only for commercial loans
DA refinance modifies rate only; modification changes all terms
Explanation
A loan modification changes terms (interest rate, principal, term) of the existing loan without replacing it. A refinance pays off the existing loan and replaces it with a new loan, usually at different terms. Modifications are common for borrowers in financial hardship.
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