An agreement for mortgage payment forbearance agreement is made between a lender and borrower who is delinquent on their mortgage in order to provide a plan that will allow the borrower to bring their mortgage payments current over a short period of time. The payments are generally reduced or suspended. At the end of that time, the borrower continues to make their regular mortgage payments. The lender may also agree to reduce the principal. Reducing the principal makes the most sense when the borrower is upside down on their mortgage. This means that the borrower owes more on their loan than their property is worth in today’s market.
Forbearance is an option that can used for borrowers who have a short term financial hardship such as a reduction in income, a disability or illness. It prevents the lender from foreclosing, and it allows the borrower to keep their home. You should speak to a foreclosure defense attorney to find out about other foreclosure prevention options.
How to Obtain?
In order to obtain forbearance, you need to contact your lender to explain your financial situation. You will need to prove to your lender that your financial hardship is temporary otherwise they will not approve the mortgage payment forbearance agreement. Your attorney can also negotiate forbearance with your lender. Keep in mind that you must stay current on your payment plan, or your lender could foreclose. Also, if you default on a second mortgage, you could still end up in foreclosure. Always keep your lender informed of your intentions.
Government Help for Unemployed Borrowers
Under the government’s Home Affordable Program (HAMP) program, unemployed borrowers are eligible for forbearance if they have been unemployed for at least 3 months, show proof of their employment and are either participating in the HAMP program or have been turned down under HAMP for a modification. Both you and your lender must participate in the program. You may obtain the following relief:
- Your payment may either be suspended for three months, and in some circumstances as long as six months.
- Your payment may be reduced.
- Your principal may be reduced.
- After 6 months, if you are still unemployed or have reduced income, then you may be offered a mortgage modification, deed in lieu of foreclosure or short sale.
Consult with Attorney
A foreclosure defense attorney is experienced in foreclosure prevention laws, and can help you negotiate forbearance with your lender or advise you of other options. Lenders work with borrowers’ attorneys regularly, and tend to take borrower’s requests more seriously when they are represented by an attorney.
