Forbearance is a special agreement between the lender and the borrower to delay a foreclosure. The literal meaning of forbearance is "holding back." This is also referred to as a mortgage moratorium.

How It Works

When mortgage borrowers are unable to meet their repayment terms, lenders may opt to foreclose. To avoid foreclosure, the lender and the borrower can make an agreement called "forbearance." According to this agreement, the lender delays its right to exercise foreclosure if the borrower can catch up to its payment schedule by a certain time.

Types of Forbearance

Examples of the types of forbearance which lenders may potentially consider include:

• Full Moratorium — A complete pause on payments for a set period
• Reduced Payments — Lower payments during the hardship period
• Interest-Only Payments — Paying only the interest portion
• Reduced Interest Rate — Temporarily lowering the interest rate
• Split Mortgage — Portion of loan paused until a future date

Important Considerations

• Forbearance is NOT forgiveness — Interest continues to accrue
• At the end of the forbearance period, you will be required to repay the missed payments
• Options include bringing payments current, paying the loan in full, or a mortgage modification
• Forbearance will be reported to credit bureaus and may affect your credit score
• It provides temporary relief while you get back on your feet

Is It Right for You?

Forbearance is ideal for homeowners who:

• Have a temporary or short-term financial difficulty
• Expect to resume full mortgage payments in the near future
• Need time to sell the home or explore other options
• Have been impacted by a one-time event (job loss, medical emergency, etc.)

COVID-19 Forbearance

In response to COVID-19, government-sponsored mortgage loans in the United States qualify for forbearance plans in compliance with the CARES Act. These plans are for borrowers impacted by COVID-19.