Avoiding Foreclosure through Forbearance

Sam

Forbearance is a temporary agreement under which a mortgage lender can either reduce or suspend monthly installments paid by the borrower. Usually forbearance continues for a period of less than 6 months, but it can last for some more time depending upon the lender.

Through forbearance, borrowers get the chance to avoid foreclosure - a legal process by which the lender can sell off the property and recover the outstanding loan balance.

But forbearance is not allowed to each and every borrower. Generally, those having recently lost their sources of income and going through financial problems are allowed to go through forbearance. Lenders consider such an approach only if the borrower can convince them that the problem is temporary. The borrower should also have relevant proofs stating that he is capable of qualifying for the reduced payment plan.

At the end of the forbearance agreement, the borrower has to make regular payments along with an extra amount that will make up for the loss on account of non-payment or reduced payments. Usually the repayment period does not exceed a year.

Forbearance does not imply that the lender has forgiven the debt; rather it allows a borrower to get along with the loan payments that he owes within a later date.

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What are good terms to accept?

jameshogg · Posted: Wed Mar 19, 2008 11:44 pm Post subject:

Hi kathie,

Welcome to forums.

I've already replied to your query at http://www.mortgagefit.com/loantalk/forbearance.html . Please have a look at it.

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