What distinguishes loan modification from refinancing in the context of default risk?

• A. Modification changes terms of an existing loan to avoid default; refinancing pays off the existing loan and creates a new loan with new terms.
• B. Modification extends the repayment period but does not change the loan; refinancing doesn't pay off the existing mortgage.
• C. Modification is only for adjustable-rate mortgages; refinancing is for fixed-rate mortgages.
• D. Modification creates a second lien on the property; refinancing reduces the interest rate only.

Answer: (A)