Loanbox Mortgage

What is Forbearance?

Forbearance is an agreement between the lender and borrower that temporarily postpones mortgage payments. This is done to avoid the lender foreclosing the property. A lender may delay its right to foreclose the property if the borrower meets his or her obligation by the agreed-upon time.


This option is viable to people behind on their mortgage payments or on the verge of missing payments and those who are experiencing a temporary hardship like those whose livelihood was affected by the coronavirus pandemic.


How Does Forbearance Work?

Forbearance reduces one’s monthly mortgage payment or, in some cases, suspends it completely during the forbearance period. Those qualified for this option may discuss the following terms with their lender:

  • The length of the forbearance period
  • Reduced payment amount
  • The terms of repayment

After the forbearance period has ended, the borrower will need to repay the amount that was reduced or suspended. One is not required to repay all missed payments at once. Depending on the agreement, one may be allowed to add a specific amount to their payments each month until the full amount is repaid.


The Actions To Take

Those planning to negotiate a forbearance agreement will need to first gather their financial information. They need to make sure they have the basic financial and loan information on hand, such as mortgage statements and income details, before talking to the mortgage company.


The next step is explaining their current situation to the lender. This part involves outlining why they are having trouble making mortgage payments, and if this difficulty is temporary or long-term. The borrower will have to make the mortgage company understand his or her situation to arrive at an agreement.


Forbearance For Federally-Backed Mortgages

The Coronavirus Aid, Relief, and Economic Security (CARES) Act puts in place two protections for homeowners with federally backed mortgages:


Lender or loan servicer may not foreclose on borrowers for 60 days after March 18, 2020. The new law prohibits them from beginning a judicial or non-judicial foreclosure or from finalizing a foreclosure judgment or sale during this period of time.


Those experiencing financial hardship due to the coronavirus pandemic have a right to request a forbearance for up to 180 days and the right to request an extension for up to another 180 days. They need to contact their loan servicer to request forbearance.


The biggest mistake one can make is delaying action. It is advisable to contact one’s mortgage company immediately to see if a forbearance option is available.


Make The Best Decision

Need help with negotiating a forbearance agreement? Call (949) 284-2700 to receive expert advice from a Loanbox Mortgage consultant or visit Loanbox Mortgage for a free quote.

A Canadian native, Noelle attended Ryerson Polytechnic Institute in Toronto where she obtained a Bachelor of Technology in Architectural Science. In 1990 she moved to Southern California and got her start in the mortgage industry. In 1994 she obtained her Mortgage Broker License and has since managed mortgage and private lending companies.
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