What term is used to refer to the restructuring of a loan by changing the loan terms to help prevent foreclosure?

The term that describes the restructuring of a loan by altering the loan terms to help prevent foreclosure is modification. This process typically involves negotiating new terms, such as reducing the interest rate, extending the loan term, or adjusting the monthly payment amount, thereby making it easier for the borrower to continue making payments and avoid foreclosure.

The other terms do have distinct meanings that differ from modification. Refinancing refers to replacing an existing loan with a new one, often to secure better rates but not specifically aimed solely at preventing foreclosure. Recasting is primarily about adjusting the loan balance to lower monthly payments without changing the interest rate or term significantly. Deferment pertains to postponing payments on a loan, which does not involve changing the loan's original terms. Understanding these distinctions is crucial in real estate and finance contexts when discussing solutions to potential foreclosure situations.