The proposed Uniform Mortgage Modification Act of 2025 aims to streamline the mortgage modification process for both residential and commercial borrowers, helping them avoid foreclosure while preserving their relationships with lenders. The Act introduces safe harbor provisions for specific modifications, such as extensions of maturity dates, decreases in interest rates, and adjustments to payment schedules, ensuring that these changes do not affect the priority of the mortgage or require recording to maintain that priority. It clarifies that modifications that materially prejudice junior lienholders are excluded from these safe harbors, thereby providing legal certainty and reducing transaction costs for borrowers. The Act emphasizes uniformity across jurisdictions, which is particularly beneficial for interstate transactions, while not disrupting existing laws governing modifications outside of the safe harbors.

Additionally, the bill establishes a comprehensive framework for mortgage modifications, defining key terms and clarifying that modifications within the safe harbors do not constitute a novation, meaning the original loan remains secured by the mortgage. It specifies that recording a modification is not necessary to retain priority, although it may be beneficial for notifying third parties. The Act also amends the Electronic Signatures in Global and National Commerce Act to ensure that electronic records and signatures are recognized in mortgage modifications, while allowing states to opt out of federal preemption under certain conditions. A severability clause is included to maintain the enforceability of remaining provisions if any part of the Act is found invalid.