A forbearance agreement might be thought of as a short-term loan modification. When you anticipate being unable to make your mortgage payments for a short period of time (6 months or less, on average) the bank may defer your payments. Those missed payments and interest will be tacked onto the principal of the loan until the forbearance period is concluded.
Cannot begin forbearance negotiations until delinquent
You cannot begin forbearance until you are delinquent by at least a month. You cannot claim forbearance on your home because of a natural disaster, but banks are generally very lenient when someone is suddenly out of the job because they have been injured or fallen on sudden illness. Banks want to see those mortgage payments paid again, on time, and as quickly as possible. Because of this, many lenders are exceptionally accommodating where injury, illness and temporary unemployment are concerned.
Negotiate a payment plan
A typical forbearance agreement calls for the borrower to pay back the overdue cash within 3-12 months. If you were in forbearance for 3 months, you may be expected to pay your regular mortgage and an additional ½ mortgage payment more over 6 months to pay back what you owe.
Bank’s will know where to start forbearance plans
Once you are in delinquency, call your lender and explain your situation. Their loss mitigation department will usually know what to do. You may be looking at a loan modification if you expect to be out of work for longer than 3-6 months.