Repayment Plan
An agreement to catch up on missed payments by paying extra each month — spreading the arrears over time without changing the underlying loan.
A Repayment Plan is an agreement between the homeowner and servicer to catch up on missed payments by spreading the arrears over a specified period. For example: if you missed 6 payments of $1,500 each ($9,000 in arrears), a 12-month repayment plan would add $750/month to your regular $1,500 payment — you pay $2,250/month for 12 months to catch up. Key characteristics: (1) the original loan terms (interest rate, term, payment) are UNCHANGED — only the arrears are spread out, (2) repayment plans typically run 3-12 months, (3) you must be able to afford the higher payment (regular payment + arrears portion), and (4) you resume the regular payment after the plan is completed. Repayment plans are appropriate when: the hardship was temporary and has resolved, you have returned to pre-hardship income, but you need time to catch up on the arrears.
Purpose
- 1Repay missed mortgage payments over time without permanently changing the loan
- 2Cure the default and bring the loan current
- 3Avoid foreclosure by demonstrating the ability to resume full payments plus an arrears contribution
Who Prepares It
The servicer prepares the Repayment Plan agreement. The homeowner signs, agreeing to the plan terms. The plan must be in writing and specify: duration, total arrears, monthly arrears contribution, total monthly payment during the plan, and payoff date (when the loan will be current).
When It Is Used
Used when: the homeowner has recovered from a temporary hardship, has returned to pre-hardship income, can afford the regular payment PLUS the additional arrears contribution, and the arrears can be repaid within a reasonable period (typically 3-12 months).
Legal Effect
The Repayment Plan is a binding contract. If the homeowner makes all plan payments on time, the loan is brought current and the default is cured. If the homeowner misses any plan payment, the servicer may terminate the plan and resume foreclosure. A Repayment Plan does NOT extinguish the original Note — it only provides a schedule for curing the default.
Common Mistakes
Homeowner Rights
Other Loan Modification & Loss Mitigation Documents
Loan Modification Agreement
The binding contract that permanently changes the terms of your mortgage — lower rate, extended term, principal forbearance, or other relief.
Borrower Assistance Package
The complete set of documents required by the servicer for a loss mitigation review — also called a Complete Loss Mitigation Application (CLMA).
Loss Mitigation Application (Uniform Borrower Assistance Form)
The standardized application form (Form 710) used to apply for mortgage assistance — the gateway document for all loss mitigation options.
Forbearance Agreement
A temporary agreement to reduce or suspend mortgage payments — distinct from a permanent modification and with important conditions at the end.
Partial Claim Agreement (FHA)
The FHA loss mitigation option that uses HUD funds to pay arrears as a junior lien — available only for FHA-insured loans.
Short Sale Package
The complete application to sell the home for less than the mortgage balance — the alternative to foreclosure that requires lender approval.
Deed in Lieu of Foreclosure Package
The application to voluntarily transfer the property title to the lender — avoiding a formal foreclosure process.
Foreclosure Mediation Packet
The comprehensive document package submitted for mandatory or voluntary foreclosure mediation — preparing this well can save your home.
Frequently Asked Questions
What's the difference between a Repayment Plan and a Loan Modification?▼
A Repayment Plan spreads the arrears over time without changing the loan — the interest rate, term, and payment stay the same. A Loan Modification PERMANENTLY changes the loan terms — lower rate, extended term, different payment. Repayment plans are for temporary hardships that have resolved (you earned $5k before, lost your job for 6 months, now earn $5k again). Modifications are for permanent income reductions (you now earn $3.5k instead of $5k and the original payment is unaffordable).
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