A mortgage payment forbearance is an agreement made between a delinquent mortgage holder and their lender concerning the future payments of outstanding mortgage debts. In the agreement, the lender will agree to forgo taking foreclosure actions upon a given borrower for a temporary time period, while also offering homeowner’s the chance to forgo making full or any payments on their current mortgage for a set timeframe, usually no more than three to six months. In turn, the homeowner will have to repay any unpaid sum, and in the interim, the homeowner must take concrete action to meet future payment obligations.
Mortgage Payments before Forbearance Periods
Before forbearance occurs, homeowners are either delinquent in payments on a mortgage or face delinquency. However, to obtain lender approval for forbearance, most lenders will require homeowners to provide information in the form of a hardship letter. The letter, in cases involving hardship requests relating to forbearance, will demonstrate to a lender that a given homeowner’s inability to pay is the result of a viable hardship. In turn, the homeowner will seek to demonstrate their current inability pay mortgage debts are related solely to a given hardship, which is only temporary in nature. In order to approve forbearance, lenders typically look to see if forbearance will actually help homeowners make future payments after the forbearance period is over.
Mortgage Payments during Forbearance Periods
Depending on the case-specific terms of a given forbearance agreement, homeowners will be required to do the following for their mortgage payments during forbearance:
- Make partial or no payment on their existing mortgage agreement, which will vary depending on the pre-arranged agreement with their lender
- Continue with the nonpayment or partial payment terms of the forbearance agreement only for the specified timeframe pre-arranged with their lender, which typically runs anywhere from three to six months
- Make arrangements to pay future mortgage payments in the months following forbearance
Mortgage Payments after Forbearance Periods
The longest lasting effect forbearance has on a mortgage comes following the forbearance period itself. While each forbearance agreement between a lender and borrower will vary, the following lists some of the common effects forbearance has on mortgage payments after the reprieve period ends, including:
- Unpaid sums during forbearance are built back into a loan. The method that your lender uses for your specific forbearance will vary, and in turn, homeowners should be wary of any adjustments to their mortgage payments, including how future payments will be built back into a mortgage
- The forbearance may also make other adjustments and modifications to a mortgage on a case by case basis. Homeowners should be aware of these adjustments before agreeing to any forbearance
- The forbearance will most likely cause an increase in monthly payments following the temporary reprieve approved by lenders. Homeowners should find out ahead of time how much their monthly payments will increase and how long to expect these increases
- Homeowners should also consider the effects a forbearance may have on their credit report and ability to gain other foreclosure prevention relief from their lender in the future
Getting Legal Help with Forbearance Requests
Each forbearance agreement is different and will pose different long-term implications on a given homeowner’s mortgage agreement. Having an attorney review and negotiate the terms of a forbearance agreement is helpful for homeowners.
