Forbearance

How Forbearance Works

A forbearance agreement allows a borrower experiencing temporary financial hardship to pause or reduce mortgage payments for a set period. Common qualifying hardships include job loss, medical emergencies, natural disasters, or significant income reduction. The borrower contacts the servicer to request forbearance, and the servicer evaluates the request based on the hardship type and the investor guidelines governing the loan. Forbearance does not eliminate the debt; the missed or reduced payments must eventually be repaid.

Terms and Duration

Forbearance terms vary by loan type and investor. For federally backed loans (FHA, VA, USDA, Fannie Mae, Freddie Mac), initial forbearance periods are typically with the possibility of extension for . The specific terms depend on the program and the nature of the hardship. During forbearance, the servicer generally does not report the account as delinquent if the borrower entered the agreement while current, though policies vary. Late fees are typically waived during the forbearance period.

Repayment Options After Forbearance

When the forbearance period ends, borrowers typically have several repayment options:

• Reinstatement - paying the full past-due amount in a lump sum
• Repayment plan - spreading the missed payments over several months in addition to regular payments
• Loan modification - permanently changing the loan terms to incorporate the missed payments
• Deferral - moving the missed payments to the end of the loan term as a non-interest-bearing balance (available on some loan types)

Borrowers should contact their servicer before the forbearance period expires to discuss which option best fits their financial situation. Ignoring the end of forbearance can lead to delinquency and potential foreclosure proceedings.