Forbearance Plans and What They Mean for You
The best way to keep a home when a homeowner has a temporary financial hardship is a forbearance plan.
A forbearance plan is an agreement made between a lender and the homeowner where the lender allows the homeowner to miss a couple of payments, or even forgives some of the already missed payments, and then requires the homeowner to make up the payments later. In most cases, this is done by making payment-and-a-half payments for several months in a row after the missed payments. The repayment plan can be structured in several ways.
The advantage of pursuing a forbearance plan is that it can help avoid foreclosure and keep a homeowner in a home that they really can afford – if they can just be given time to catch up on their payments.
The disadvantage to a forbearance plan is that most people are either not eligible for these plans or those who are eligible are not able to ever catch up once the payment-and-a-half payments period begins. They just cannot afford the new or continued payments.
Common Questions About Forbearance Plans
Forbearance plans, if approved, usually delay foreclosure but often don’t permanently prevent it. Before exploring this option, make sure you talk to us. Regardless of your situation, income, or equity, we would love to help you!
Question: Can anyone get a forbearance plan?
Answer: No, in most cases the lender will have to review each homeowner's individual circumstance to see if they are eligible. If you miss payments causing a hardship due to a temporary situation, such as a one-time rough spot like a temporary job loss that is now over, then you are more likely to be eligible and the program probably makes sense. If, however, your financial hardship is ongoing, such as a loss of income that has not been replaced, a forbearance plan probably won't be approved and won't do any good anyway. In these situations, other selling options are often better.