What is the difference between a repayment plan and a loan modification?
A repayment plan usually allows a borrower to catch up delinquent mortgage payments by making the regular payment plus an additional amount each month to go towards catching up the delinquent payments. The regular monthly payment amount, the interest rate and the length of the loan are usually not adjusted, and the mortgage company may or may not continue with legal action during a repayment plan. A loan modification usually includes an adjustment to the regular monthly payment amount, by either modifying the interest rate or adjusting the length of the loan, or both. Most loan modifications will add the amount owed for delinquent payments to the balance of the loan, to be repaid over the life of the loan, so there is no “catch up” payment to make in addition to the regular monthly mortgage payment.
