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:

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.

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.

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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What Is A Mortgage Forbearance?

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