First American – What Do You Need to Know About Workout Strategies?: “I. MODIFICATION AGREEMENTS I. Business Reasons for Modification of Loan Documents 1. Extend (or shorten) maturity date. 2. Capitalize delinquent interest. 3. Raise (or lower) interest rate. 4. Increase default rate. 5. Change or postpone payment dates, or amount of payment. 6. Permit assumption and release (or not release) borrower from liability. 7. Provide for additional principal disbursements. 8. Partially release property. 9. Require additional security for loan (additional property, personal guarantee of borrower or third parties, etc.). Note: The receipt of additional security by the lender for an antecedent debt may constitute a preferential transfer under sec. 547 of Bankruptcy Code if borrower files bankruptcy within 90 days thereafter. 10. When modifying mortgage, opportunity exists to correct or add other provisions, e.g., due-on-sale clause, cross default, guaranty, etc. II. General Legal Considerations 1. Modification Agreements are useful prior to acceleration of loan and foreclosure. 2. Obtain title search to determine if there are any other liens on the property. 3. Law is that, normally, priority of lien will be lost to extent that subordinate lienholders are prejudiced, or security is impaired, unless s”