Loan Forbearance is an agreement between a lender and a borrower where the lender agrees to delay their right to exercise foreclosure proceedings as long as the borrower can catch up on their payments in a certain amount of time. If a significant financial hardship has caused a homeowner to fall between 3 to 12 months past due on their mortgage, they may be eligible for a loan forbearance.

With a loan forbearance, the borrower will be allowed to delay or reduce their mortgage payments for an agreed upon amount of time, with the understanding that another option will be worked out at the end of that time to bring their account to a current status. If the lender agrees to a forbearance agreement, they will cease their legal actions for the time being.

The amount of time the lender will allow forbearance, and the payment plan they agree to, will be determined on a case by case basis. Typical lender approval of a loan forbearance agreement can result in spreading the repayments over a 12 to 18 month period, if not longer.

With some special forbearance agreements, our clients will make no monthly payments or will make reduced monthly payments. Once the loan for forbearance time frame is agreed upon, the lender may agree to combine your loan forbearance with a reinstatement or a repayment plan. At this point, we usually request that lenders further modify the existing mortgage loan(s).

Forbearance is meant for temporary financial hardships and typically only work with FHA Loans. We do not recommend a loan forbearance if more serious problems are at hand or if the borrower can no longer afford to make their monthly mortgage payments.

At S.J. Packman & Associates, before we make any recommendations, our attorneys, certified debt specialists, and paralegals, are trained to ask the right questions to find out about your specific situation. Based on your current income and your financial hardship, we will determine which course of action will work best for you. We do not only offer one path, as there is no one process that can solve everyone’s needs. We will take our time with you and help evaluate what your best course of action should be. Call now and one of our advisors will be there to get you started on your path to financial freedom. There is no obligation to enroll, so don’t delay.