re-amortize loan before default

I have a question about the timing of loan re-amortization to avoid default. I have reviewed Notice 2023-43, but would like to ask for thoughts.

Participant took a loan with a term of 3 years. Employer failed to start loan payments and the employee missed the first 4 payments. The employer found the error and began payments on the 5th scheduled payment. The plan uses the cure period so the loan is not at risk of defaulting assuming all future loan payments are paid timely. However, the employee and employer would like to bring the loan current, but the employee does not want to make a lump sum payment of 4 payments. The idea is to re-amortize the loan keeping it within the 3 year original payoff date and increase the payment amount slightly to still pay off at the original due date.

Do you see a problem with re-amortizing before the loan is in default? EPCRS talks about refinancing after default, but is there a reason why you can't refinance before default? I am getting a lot of push back from the TPA that re-amortization cannot be done unless the loan is in default (we don't want to miss payments on purpose, just to get into default so we can refinance).

Thanks

I don't see any problem especially if it was the employer who was in error on starting the payments.