### What is a repayment plan? - [ ] An up-front payment for the full mortgage amount - [x] A contract between a borrower and lender to manage missed payments - [ ] A loan taken to pay off another loan - [ ] A plan for overpaying mortgage installments > **Explanation:** A repayment plan is a contract created between a borrower and their lender when the borrower falls behind on mortgage payments. This plan aims to manage missed payments and avoid foreclosure by negotiating a feasible repayment method. ### Why do lenders create repayment plans with borrowers? - [ ] To increase the interest rate on the loan - [ ] To eventually seize the property - [ ] To delay the inevitable default - [x] To avoid costly legal expenses associated with foreclosure > **Explanation:** Lenders prefer creating repayment plans with borrowers to avoid the costly legal expenses and processes involved in foreclosure. This approach helps both parties manage the situation more feasibly. ### What happens to the full loan amount in a repayment plan? - [ ] It gets written off - [ ] It is reduced permanently - [x] The borrower is still responsible for the full loan amount - [ ] It gets converted into another type of loan > **Explanation:** In a repayment plan, the borrower remains responsible for the full loan amount. The plan helps manage temporary financial difficulties but does not alter the overall loan obligation. ### What can a repayment plan offer to a borrower during financial difficulties? - [ ] Complete forgiveness of the loan - [x] Decreased monthly payments for a specific period - [ ] Removal of interest payments - [ ] Conversion to a grant > **Explanation:** Repayment plans can offer borrowers decreased monthly payments over a specified period or deferred payments to help them manage temporary financial hardship, allowing them to keep their home and avoid foreclosure. ### What is the ultimate goal of a repayment plan for a borrower? - [ ] To permanently lower the interest rate - [x] To keep their home and avoid foreclosure - [ ] To completely eliminate monthly payments - [ ] To extend the loan term indefinitely > **Explanation:** The ultimate goal of a repayment plan is to help the borrower keep their home and avoid foreclosure by providing temporary financial relief, allowing the borrower to catch up on missed payments. ### How do repayment plans vary? - [ ] They don't vary and are the same for all borrowers - [x] They are tailored to individual borrower's circumstances - [ ] They mainly focus on interest rate adjustments - [ ] They involve taking out a new mortgage > **Explanation:** Repayment plans vary from borrower to borrower as they are tailored to the specific financial circumstances and needs of each borrower to create a manageable way to catch up on missed payments. ### In what situation are repayment plans most often utilized? - [ ] When buying a second home - [x] During difficult economic times - [ ] For investment properties - [ ] At the start of a loan term > **Explanation:** Repayment plans are most often utilized during difficult economic times when borrowers encounter financial issues that make it hard for them to meet their mortgage payment obligations. ### What is one potential feature of a repayment plan? - [ ] Complete cancellation of the debt - [ ] Fixed higher payments - [x] Deferred payments for a few months - [ ] Permanent decrease in interest rate > **Explanation:** One potential feature of a repayment plan can be deferred payments for a few months, which temporarily relieves the borrower from paying monthly installments to help them recover financially. ### What is the primary benefit of a repayment plan for borrowers? - [ ] It eliminates the need for any mortgage payments - [x] It helps avoid foreclosure - [ ] It decreases property taxes - [ ] It improves credit score immediately > **Explanation:** The primary benefit of a repayment plan is that it helps the borrower avoid foreclosure by providing temporary financial relief and a structured approach to catching up on missed payments. ### Who ultimately bears the responsibility of the full loan amount in a repayment plan? - [ ] The lender - [ ] A third-party guarantor - [ ] The government - [x] The borrower > **Explanation:** In a repayment plan, the borrower ultimately bears the responsibility of the full loan amount. The plan serves as a temporary arrangement to manage missed payments rather than forgiving the debt.