Mortgage Forbearance

What Is A Mortgage Forbearance?


A mortgage forbearance is an agreement between a mortgage lender and a borrower to delay a foreclosure. It is an agreement in which the lender agrees to temporarily suspend payments on a mortgage and the borrower agrees to a mortgage plan that will allow the borrower to catch up on payments later on.

Things To Know About A Mortgage Forbearance:
When The Forbearance Period Ends
THE MISSED PAYMENTS BECOME DUE AT THE TIME THE FORBEARANCE PERIOD ENDS
(typically between 3 – 12 months).

There are generally three ways to address those missed payments:
1) Pay the total amount at once (a lump-sum);
2) Enter into a repayment plan;
3) Modify the mortgage terms to create a new affordable long-term payment.
Simple Example:
The typical conventional mortgage payment is $1,200 with taxes and insurance.
If you get a 3 month forbearance, your next payment is 4 months out. If the typical conventional mortgage payment is $1,200 then $4,800 is due at month 4.
What A Forbearance Is NOT
FORBEARANCE IS NOT DEFERMENT.

FORBEARANCE IS NOT A PAYMENT PLAN.

FORBEARANCE IS NOT FORGIVENESS.
The zero payments will result in a balloon mortgage or other modification options.
A Few More Major Tips:
1

If you go into a forbearance on your existing loan, current guidelines from Fannie and Freddie say you ARE NOT ELIGIBLE to get a new conventional loan if you have deferred any payments because while credit suppression is applied, you are actually delinquent.

IF YOU CAN PAY YOUR PAYMENT, THEN PAY IT.

A forbearance is there for anyone who needs it, but the intention is for people who have lost their jobs or income and cannot pay.

2

IF YOU JUST WANT PAYMENT RELIEF,

you will be better off to refinance out of a short-term mortgage and into a 30-year mortgage to get payment reduction.

3

A good rule of thumb is:

TO GET A NEW MORTGAGE, YOU HAVE TO BE PAYING YOUR EXISTING MORTGAGE ON-TIME.

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