In one sentence
A negotiated change to an existing loan's terms, such as rate, maturity, amortization, or covenants, documented and often requiring consents.
The longer version
Modifications range from routine extensions to substantial restructurings. Each requires documentation, and depending on the change, consents from guarantors, participants, or subordinate lenders.
Modifications on participated or securitized loans multiply the consent problem, which is why the document flow around them is its own servicing workstream.
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