Why would a lender agree to a loan modification?

Usually, a lender agrees to modify a loan for the simple reason that it will cost them less than if they were to foreclose on your property. Foreclosure is an expensive, lengthy process. Faced with that, a loan modification can be an appealing option to a lender.

Can the lender include late charges in the Loan Modification?

Per HUD, the accrued late charges should be waived by the lender at the time of the loan workout-this varies depending on the type of loan-but always request a complete breakdown and description of all fees and penalties from your lender.