Posted on: 11th Apr, 2004 10:22 pm
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 on mortgage, 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.
Through forbearance on mortgage, 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.
Welcome Ricky,
I can understand that you're going through a tough time. If you want to get rid of the property, then I would suggest you to write a hardship letter to your lender and apply for a deed in lieu of foreclosure. Though it will lower your credit score by 250 points, you won't be responsible for the deficient amount resulting from the sale of the property. However, you should also note that after a deed in lieu, you will not be able to qualify for a loan immediately. You'll have to wait for the 3-4 years in order to get a loan.
I can understand that you're going through a tough time. If you want to get rid of the property, then I would suggest you to write a hardship letter to your lender and apply for a deed in lieu of foreclosure. Though it will lower your credit score by 250 points, you won't be responsible for the deficient amount resulting from the sale of the property. However, you should also note that after a deed in lieu, you will not be able to qualify for a loan immediately. You'll have to wait for the 3-4 years in order to get a loan.
Hello,
I went through a forebearance period last year for about 7-8 months and then at the end of it they wanted all those payments at once. While the forebearance was going on I was working on a loan modification. I never got refused or approved. Anyway my home went into foreclosure and got down to two weeks before the sell date and I borrowed all that back money from a relative and reinstated the loan. If I had known they wanted all of it at the end like that I would have never done that. I almost lost my home.
I went through a forebearance period last year for about 7-8 months and then at the end of it they wanted all those payments at once. While the forebearance was going on I was working on a loan modification. I never got refused or approved. Anyway my home went into foreclosure and got down to two weeks before the sell date and I borrowed all that back money from a relative and reinstated the loan. If I had known they wanted all of it at the end like that I would have never done that. I almost lost my home.
I just want to give a little advice about that it does hurt your credit report because you are not paying the full amount that is due and it happened to me. I had lost a lot of credit cards and also the limits on them went down because of my credit report showing that I wasn't paying my mortgage, even though I was but not the full amount. In the agreement it stated in Quotes that it would say that the mortgage was being paid but not in full so it would hurt my credit but that was a lie.
I hope it doesn't happen to you like it did me. Now I am trying to modify my home equity with Chase and they are ridiculous.
I hope it doesn't happen to you like it did me. Now I am trying to modify my home equity with Chase and they are ridiculous.
the bank offers to charge lower rate for a year , and I will reduce principal too. I agree.
they demand to sign a forbearnce agreement? is it in my benefit? ( insured me from the bank filing ) what are the negative sides of signing? do I actually consent a default in some way?
they demand to sign a forbearnce agreement? is it in my benefit? ( insured me from the bank filing ) what are the negative sides of signing? do I actually consent a default in some way?
Welcome joea,
Unless you sign the agreement, they may not lower the interest or reduce the principal. So, it is in your best interest to sign the agreement. This agreement will mention the terms and conditions of the contract.
Unless you sign the agreement, they may not lower the interest or reduce the principal. So, it is in your best interest to sign the agreement. This agreement will mention the terms and conditions of the contract.
My Freddy Mac loan servicer offered me several mortgage forbearance terms, and then demanded full payment of the (9 month arrears). They also reported to the three credit reporting agencies that we were in arrears while we were in the forbearance period. Apparently, the work-out department works indepently of the foreclosure department, and both process were in the works, concurrently. We stopped the foreclosure and obtained a modification after hiring an attorney, but our credit has been destroyed by this process. The final outcome was that the bank tacked our arrears on to the end of our principal amount, increasing our monthly payment by $250! We can now no longer qualify for a loan.
Hi maryann,
The late payments are normally added back to the principal amount which increases the payments when the repayment option is given at the time of loan modification. If you can't afford the payments, you can think of selling off the property in order to get rid of it. You can go for the option of deed in lieu of foreclosure to get rid of the property.
Thanks.
The late payments are normally added back to the principal amount which increases the payments when the repayment option is given at the time of loan modification. If you can't afford the payments, you can think of selling off the property in order to get rid of it. You can go for the option of deed in lieu of foreclosure to get rid of the property.
Thanks.
Will forbearance stop forclosure and how do I qualify??[/b]
Hi RDC,
A forbearance will help you in stopping a foreclosure. You should contact your lender and apply for a forbearance. You will have to write a hardship letter for the same. You should get in touch your with lender and he will let you know the complete process in details.
Thanks
A forbearance will help you in stopping a foreclosure. You should contact your lender and apply for a forbearance. You will have to write a hardship letter for the same. You should get in touch your with lender and he will let you know the complete process in details.
Thanks
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