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I don't blame you for your confusion. The math involved in this is mind-boggling. But the restructuring is legal in that it preserves an investor's right to receive the money that they are contractually entitled to over the term of the loan. At the same time, the lowered monthly payment has permitted you to retain ownership of your home. The back end balance is an unpleasant fact of life, but it has to be dealt with. I cannot simply be written off, or down by the investor. As your financial situation improves, you can make additional principal reduction payments which will lessen the balance owed at the end of the 20 year term. You might also be able to refinance the loan at some point along the way, or at the end with regard to paying off the remaining balance. I hope that this information is useful and that you will assign it a positive rating, at no additional cost to you.