Treatment at term of warehoused part of split mortgage: I can’t see how a modification could be considered sustainable if, after paying all the newly contracted payments (including conditional amounts), the borrower could end the term still in debt. Accordingly, at the very least, recourse at term should be limited to the collateral value.
In other words, the modification agreement should specify that, at the end of the term, any shortfall in the warehouse after sale of the property would no longer be owed.