Forbearance Agreement
A temporary agreement to reduce or suspend mortgage payments — distinct from a permanent modification and with important conditions at the end.
A Forbearance Agreement is a TEMPORARY arrangement between the homeowner and servicer to reduce or suspend mortgage payments for a specified period (typically 3-12 months). Unlike a modification (permanent), forbearance is temporary relief. During forbearance: payments may be suspended entirely, reduced to a lower amount, or placed on a specific payment schedule. At the end of the forbearance period, the homeowner must address the accumulated arrears through one of several options: lump-sum repayment (rare and difficult), a repayment plan (spreading arrears over months), a loan modification (capitalizing arrears into the loan balance), a partial claim (FHA loans), deferral (moving arrears to the end of the loan), or a short sale/deed-in-lieu. The CARES Act (March 2020) created special COVID-19 forbearance provisions (up to 18 months, with streamlined deferral/modification options at exit). Post-COVID, standard forbearance terms remain available for other hardships.
Purpose
- 1Provide temporary payment relief during a temporary hardship (job loss, medical emergency, natural disaster)
- 2Give the homeowner time to recover financially before resuming payments
- 3Stop foreclosure activity during the forbearance period
- 4Create a bridge to a permanent loss mitigation solution
Who Prepares It
The servicer prepares the Forbearance Agreement. The homeowner signs and returns it. The terms (duration, payment amount, exit options) should be clearly stated in writing.
When It Is Used
Used when the homeowner has a TEMPORARY hardship expected to resolve within months (e.g., temporary job loss, short-term medical disability). Not appropriate for permanent income reduction (where modification is needed).
Legal Effect
The Forbearance Agreement is a binding contract. During the forbearance period, the servicer agrees not to foreclose. The homeowner agrees to: (1) make the reduced/suspended payments as agreed, (2) not transfer or waste the property, and (3) address the arrears at the end of the forbearance period as specified. The critical issue is the EXIT: if the agreement doesn't specify how arrears will be resolved, the homeowner may face a balloon payment at the end — which they cannot afford.
Common Mistakes
Homeowner Rights
Other Loan Modification & Loss Mitigation Documents
Loan Modification Agreement
The binding contract that permanently changes the terms of your mortgage — lower rate, extended term, principal forbearance, or other relief.
Borrower Assistance Package
The complete set of documents required by the servicer for a loss mitigation review — also called a Complete Loss Mitigation Application (CLMA).
Loss Mitigation Application (Uniform Borrower Assistance Form)
The standardized application form (Form 710) used to apply for mortgage assistance — the gateway document for all loss mitigation options.
Repayment Plan
An agreement to catch up on missed payments by paying extra each month — spreading the arrears over time without changing the underlying loan.
Partial Claim Agreement (FHA)
The FHA loss mitigation option that uses HUD funds to pay arrears as a junior lien — available only for FHA-insured loans.
Short Sale Package
The complete application to sell the home for less than the mortgage balance — the alternative to foreclosure that requires lender approval.
Deed in Lieu of Foreclosure Package
The application to voluntarily transfer the property title to the lender — avoiding a formal foreclosure process.
Foreclosure Mediation Packet
The comprehensive document package submitted for mandatory or voluntary foreclosure mediation — preparing this well can save your home.
Frequently Asked Questions
Will I owe a lump sum at the end of forbearance?▼
It depends on the exit terms of your Forbearance Agreement. If the agreement specifies a deferral (moving arrears to the end of the loan), modification (capitalizing arrears), or repayment plan — no lump sum. If the agreement is silent on exit, the servicer may demand a lump sum. BEFORE entering forbearance, get the exit terms in writing. For COVID-19 forbearances, most servicers offer: deferral, FHA partial claim, or loan modification — lump sums are rare. For non-COVID forbearances, exit terms vary by servicer.
Can I get a modification after forbearance?▼
Yes. If your hardship is permanent (not just temporary), you can apply for a modification at the end of the forbearance period. The servicer must evaluate a complete loss mitigation application. The modification would capitalize the arrears (add them to the principal balance) and modify the interest rate, term, and/or payment to achieve affordability.
Get Your Free Full Case Review
Tell us about your situation — our senior legal team will review every detail and contact you within 24 hours with a tailored plan. No obligation. 100% confidential.
Submit Your Information
Tell us about your situation in complete confidence.
Case Analysis
Our legal team reviews your documents and foreclosure status.
Receive Your Strategy
We outline your best options and recommended path forward.
We Get to Work
Your dedicated team begins protecting your home and rights.
Ready to Protect Your Home?
Every day matters when facing foreclosure. Get your free, confidential consultation and learn your options — no obligation.
Available Monday–Friday · 10:00 AM – 6:00 PM Pacific