Understand mortgage forbearance and its benefits

Mortgage forbearance is a temporary agreement with your lender to pause or reduce payments during financial hardship. Forbearance periods typically last 3-12 months. You don’t skip payments permanently—you’ll repay them later through a repayment plan, loan modification, deferral or lump sum. Contact your servicer as soon as you anticipate trouble paying; waiting until you’re behind limits your options.

What Is Forbearance?

The Basic Concept

During forbearance:

• Your lender agrees to accept reduced or no payments temporarily
• You won’t face foreclosure during the forbearance period
• Interest continues to accrue
• Missed payments must be repaid eventually

Forbearance vs Other Options

Option	What It Is
Forbearance	Temporary payment pause
Deferral	Missed payments moved to end of loan
Modification	Permanent change to loan terms
Repayment plan	Catch up over time with higher payments

When to Request Forbearance

Valid Hardship Reasons

Income disruption:

• Job loss
• Reduced hours
• Business downturn
• Medical leave

Unexpected expenses:

• Medical emergency
• Major home repairs
• Family emergency

Life changes:

• Divorce
• Death of income earner
• Disability

When to Contact Your Servicer

Contact immediately when:

• You anticipate missing a payment
• Your income drops significantly
• An emergency arises

Don’t wait until:

• You’re already 60-90 days behind
• Foreclosure proceedings start
• You’ve exhausted savings

Earlier = more options.

How to Request Forbearance

Step 1: Contact Your Servicer

Call your mortgage servicer (company you send payments to):

• Have your account number ready
• Ask for the loss mitigation department
• Explain your hardship

Step 2: Provide Documentation

Typically required:

• Hardship letter explaining your situation
• Proof of income (current and expected)
• Monthly expense information
• Bank statements

Step 3: Review the Agreement

Before accepting, understand:

• Length of forbearance period
• What happens when it ends
• How missed payments will be handled
• Impact on credit reporting

Get everything in writing.

Step 4: Stay in Communication

During forbearance:

• Respond to servicer communications
• Update them on your situation
• Request extension if needed before period ends

Forbearance Periods

Typical Lengths

Loan Type	Initial Period	Maximum
Conventional	3-6 months	12 months
FHA	3-6 months	12 months
VA	Case by case	Flexible
USDA	Case by case	12 months

Extensions

If you need more time:

• Request before current period ends
• Explain ongoing hardship
• May require additional documentation
• Not guaranteed

What Happens After Forbearance

Option 1: Reinstatement (Lump Sum)

Pay all missed payments at once.

Best if:

• You received a lump sum (tax refund, bonus, settlement)
• Hardship was very short
• You have savings now

Example:

• 6 months forbearance
• monthly payment: $2,000
• Lump sum due: $12,000

Option 2: Repayment Plan

Spread missed payments over several months with higher payments.

How it works:

• Regular payment plus extra amount
• Typically 6-12 months
• Must afford higher payment

Example:

• Missed: $12,000 (6 months)
• Regular payment: $2,000
• Repayment plan: $2,000 + $1,000 = $3,000/month for 12 months

Option 3: Payment Deferral

Missed payments moved to end of loan.

How it works:

• No immediate repayment required
• Resume regular payments
• Deferred amount due when you sell, refinance or pay off

Best if:

• Can’t afford higher payments
• Plan to stay in home long-term
• Don’t want loan modification

Example:

• Missed: $12,000
• Deferred to end of 30-year loan
• No interest charged on deferred amount (varies by program)

Option 4: Loan Modification

Permanent change to loan terms.

Possible changes:

• Lower interest rate
• Extended term (new 30 or 40 years)
• Principal forbearance
• Missed payments capitalized into balance

Best if:

• You can’t afford current payment
• Long-term income reduction
• Need permanent relief

Option 5: Partial Claim (FHA)

HUD pays your past-due amount as a separate lien.

How it works:

• Brings loan current immediately
• Silent second lien (no payments)
• Repaid when you sell, refinance or pay off

Available for: FHA borrowers only

Credit Impact of Forbearance

During Forbearance

Federally backed loans (FHA, VA, USDA, Fannie, Freddie):

• If current when entering forbearance: Reported as current
• CARES Act protections applied during COVID

Other loans:

• Reporting varies by servicer
• May be reported as “in forbearance”
• Missed payments may show as late

After Forbearance

If you resume payments successfully:

• No ongoing negative impact
• Account returns to normal status

If you don’t successfully exit:

• Late payments may be reported
• Modification may be noted
• Foreclosure would be severely negative

Long-Term Considerations

Future mortgages:

• Lenders may ask about forbearance history
• 12 months of on-time payments after forbearance helps
• Not necessarily disqualifying

Forbearance Mistakes to Avoid

Stopping Payments Without Agreement

Just skipping payments without servicer approval:

• Triggers late fees
• Damages credit
• Can lead to foreclosure
• Eliminates options

Always get forbearance in writing before stopping payments.

Assuming Payments Are Forgiven

Forbearance is not forgiveness:

• You still owe the money
• Interest continues accruing
• Repayment is required

Not Planning for Exit

Think ahead:

• How will you repay?
• Can you afford higher payments?
• Do you need modification?

Ignoring Servicer Communications

Stay engaged:

• Respond to letters and calls
• Update on your situation
• Request help before period ends

Waiting Too Long

Options decrease as you fall further behind:

• Contact servicer at first sign of trouble
• Don’t wait until you’re months behind
• Early action = more flexibility

Special Situations

COVID-19 Forbearance (CARES Act)

If you received COVID forbearance:

• Up to 18 months available
• No credit damage if current when entering
• Multiple exit options available
• Protections for federally backed loans

Disaster-Related Forbearance

After natural disasters (hurricanes, fires, floods):

• FEMA declaration may trigger relief
• Servicers often offer forbearance
• SBA loans may have additional options
• Document all damage

FHA, VA, USDA Specifics

FHA:

• Partial claim available (up to 30% of original balance)
• Modification options
• FHA-HAMP program

VA:

• More flexible guidelines
• Servicer works with VA for options
• Refunding option

USDA:

• Special forbearance available
• Loan modification options
• Moratorium options

Alternatives to Forbearance

If You Can Make Partial Payments

Partial payment agreement:

• Pay what you can
• Servicer applies to balance
• May prevent foreclosure

If Hardship Is Permanent

Loan modification:

• Permanent payment reduction
• Changed terms
• More sustainable long-term

If You Can’t Keep the Home

Short sale:

• Sell for less than owed (with lender approval)
• Avoid foreclosure
• May negotiate deficiency waiver

Deed in lieu:

• Transfer property to lender
• Avoid foreclosure process
• May receive relocation assistance

How to work through Successfully

Before Forbearance

• Document hardship
• Gather financial information
• Research your loan type
• Know your options

During Forbearance

• Maintain communication with servicer
• Save what you can for repayment
• Track all correspondence
• Plan for exit

After Forbearance

• Resume payments on time
• Confirm proper credit reporting
• Keep documentation
• Consider refinancing if beneficial

Frequently Asked Questions

Does forbearance hurt my credit?

For federally backed loans, if you were current when entering forbearance, it’s reported as current. For other loans, it varies. The bigger risk is what happens after forbearance if you can’t resume payments.

Do I have to pay back forbearance?

Yes. Forbearance is not forgiveness. You’ll repay through lump sum, repayment plan, deferral or modification. The servicer will work with you on the method.

How long can forbearance last?

Typically 3-12 months depending on loan type and hardship. Extensions are possible. COVID forbearance allowed up to 18 months.

Can I be denied forbearance?

Technically yes, but servicers are generally motivated to help you avoid foreclosure. If denied, ask why and what alternatives exist.

What if I can’t afford payments after forbearance?

Request loan modification before forbearance ends. This changes your loan terms to make payments affordable. Don’t wait until you’re behind again.

Will forbearance affect my ability to refinance?

You may need 3-12 months of on-time payments after forbearance to refinance. Guidelines vary by loan type and lender. Ask your servicer about timing.

Can I sell my house during forbearance?

Yes. Selling is always an option. Proceeds pay off the mortgage including any deferred amounts. This is a clean exit from forbearance.

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