FYI, the reduced principal is due upon the note reaching maturity so if he makes it to the end of the term he owes the $40K at that time.

As for it being unusual, it is one of the infamous Obama HAMP modifications and I beleive they are pretty standard in design. I read the actual loan docs so I know exactly what he’s getting. Of the people you know, have you actually seen the loan docs?

I am not in the business of lending and if I was the terms would be set at the outset. If we needed to renogotiate down the line, we would have to and it happens all the time in contracts across the globe. My saying they are not taking a loss has nothing to do with putting my money where my mouth is smart ass. The deal was made and turned sour but that doesnt in and of itself create a loss. They are making the best of it and still in a positve net situation which is a gain.