What is a permanent change in one or more of the terms of a borrower's loan called?

A permanent change in one or more terms of a borrower's loan is recognized as a loan modification. This process is typically initiated when borrowers are experiencing financial difficulties and need to adjust their loan terms to make payments more manageable. Modifications can involve changes in the interest rate, loan term (length), or the principal amount — all designed to help the borrower sustain their mortgage obligations.

Loan modification is distinct from other concepts in real estate finance. For instance, loan qualification refers to the process where lenders evaluate a borrower's creditworthiness to determine if they meet the criteria for receiving a loan. Loan approval, on the other hand, is the decision made by the lender to grant the loan to the borrower once they have met all qualifications. Loan origination involves the process of creating a new loan, from application through to the final approval, and does not imply any change to existing loan terms.

In summary, loan modification specifically addresses the alteration of existing loan terms to accommodate the borrower’s needs, hence making it the correct definition in this context.