Modification is a negotiated settlement where your mortgage company will agree to change (or modify) the terms of your mortgage. It allows the homeowner to take all the money they owe the mortgage company from the missed mortgage payments, and put it back into the mortgage balance. This allows the homeowner to get back on track with the mortgage and not have to pay all the missed payments out of their pocket at one time. Also, a mortgage modification negotiation can lower the interest rate and give you a far more affordable monthly mortgage payment.