Unexpected financial problems can make it difficult to keep up with a mortgage payment.
A job loss, major expense, natural disaster, or other financial hardship can sometimes leave homeowners struggling to make their regular monthly payments.
Mortgage forbearance may provide temporary relief by allowing a borrower to pause or reduce mortgage payments for a limited period.
However, forbearance does not erase the payments that were missed or reduced. The amount still has to be repaid under an arrangement with the mortgage servicer.
Understanding how mortgage forbearance works can help homeowners determine whether it may be an appropriate option during a temporary financial hardship.
What Is Mortgage Forbearance?
Mortgage forbearance is an arrangement between a borrower and mortgage servicer that temporarily allows the borrower to pause or reduce mortgage payments.
The purpose is to provide temporary financial relief while the homeowner deals with a hardship.
Forbearance does not mean the mortgage debt disappears.
The payments that were paused or reduced still need to be addressed after the forbearance period.
The specific terms and repayment options depend on the mortgage, servicer, and circumstances.
How Does Mortgage Forbearance Work?
When a borrower is experiencing financial difficulty, they can contact their mortgage servicer and ask about available hardship assistance.
If the borrower qualifies for forbearance, the servicer may allow payments to be temporarily paused or reduced.
The homeowner then follows the agreed-upon terms during the forbearance period.
Before the forbearance ends, the borrower and servicer should establish how the missed or reduced payments will be handled.
Possible repayment arrangements can include a repayment plan, payment deferral, loan modification, or other options depending on the mortgage.
Why Would Someone Request Mortgage Forbearance?
Forbearance can be considered when a homeowner is experiencing a temporary financial hardship.
Possible situations include:
- Job loss
- Reduced income
- Unexpected medical expenses
- Natural disaster
- Major property damage
- Temporary business difficulties
- Other significant financial hardships
The important factor is that the homeowner is having difficulty maintaining the regular mortgage payment.
If you believe you may miss a payment, contacting the servicer early is generally better than waiting until the mortgage becomes seriously delinquent.
Does Mortgage Forbearance Forgive Your Mortgage Payments?
No.
This is one of the most important things to understand.
Forbearance does not erase the amount you were supposed to pay.
If you were allowed to pause three monthly payments of $2,000, for example, the temporarily unpaid amount could total:
$2,000 × 3 = $6,000
That $6,000 would still need to be addressed according to the repayment arrangement.
The exact amount and treatment can depend on the terms of your forbearance agreement.
Does Interest Continue During Forbearance?
Interest treatment depends on the specific loan and forbearance arrangement.
Homeowners should ask their servicer exactly how interest will be handled before agreeing to forbearance.
Important questions include:
- Does interest continue to accrue?
- Will the missed payments be added to the loan balance?
- Will the mortgage term change?
- Will the monthly payment change afterward?
- When does repayment begin?
Do not assume that pausing payments means there will be no additional financial cost.
What Happens to Missed Payments After Forbearance?
The missed or reduced payments generally need to be repaid through an arrangement with the servicer.
There is not one repayment method that applies to every borrower.
Depending on the loan and circumstances, options can include:
- Repayment plan
- Payment deferral
- Loan modification
- Reinstatement
- Other loss mitigation options
Your servicer should explain which options are available for your specific mortgage.
What Is a Mortgage Repayment Plan?
A repayment plan allows a borrower to catch up on missed payments by adding part of the past-due amount to regular monthly payments over a period of time.
For example, imagine a homeowner owes $6,000 in missed payments.
Instead of paying the entire $6,000 immediately, a servicer may offer a repayment arrangement that spreads the amount across future payments.
The result would be a temporarily higher monthly mortgage payment.
Before accepting a repayment plan, make sure you can realistically afford the increased payment.
What Is a Mortgage Payment Deferral?
A payment deferral may allow certain missed payments to be moved to the end of the mortgage or otherwise handled through a deferred balance.
This can allow a homeowner to resume the regular monthly mortgage payment without immediately paying all of the missed amount.
The exact structure depends on the mortgage and applicable program requirements.
Some deferral arrangements may require the deferred amount to be repaid when the homeowner sells or refinances the property or when the mortgage otherwise ends.
What Is a Loan Modification?
A loan modification changes one or more terms of an existing mortgage.
Depending on the situation, a modification may change:
- Interest rate
- Loan term
- Monthly payment
- Principal balance treatment
- Other loan terms
A modification may be considered when a homeowner’s financial difficulty is more than temporary or when the existing payment is no longer affordable.
The specific modification options available depend on the mortgage and servicer.
Is Forbearance the Same as Loan Modification?
No.
Forbearance is generally designed to provide temporary payment relief.
A loan modification changes the terms of the mortgage to address affordability or other long-term issues.
For example, a homeowner experiencing a short-term income interruption may potentially benefit from temporary payment relief.
A homeowner whose financial situation has permanently changed may need to discuss longer-term solutions with the servicer.
Can Mortgage Forbearance Prevent Foreclosure?
Forbearance may help a homeowner avoid foreclosure by providing temporary payment relief while they work with their servicer on a solution.
However, it does not automatically eliminate foreclosure risk.
The homeowner still needs to follow the terms of the agreement and establish a plan for addressing the missed payments.
If you are already seriously behind on your mortgage, contact your servicer as soon as possible and ask about available loss mitigation options.
The Consumer Financial Protection Bureau also recommends contacting a HUD-approved housing counselor if you need help understanding your options.
Can You Request Forbearance Before Missing a Payment?
You can contact your mortgage servicer as soon as you realize you may have trouble making future payments.
You do not necessarily have to wait until you are already significantly behind.
Early communication gives you more time to understand your available options and any requirements associated with requesting assistance.
Tell your servicer what happened, how your income has changed, and whether you expect the hardship to be temporary or ongoing.
How Do You Request Mortgage Forbearance?
Start by contacting the company that currently services your mortgage.
Explain your financial situation and ask what hardship or forbearance options are available.
You may need to provide documentation depending on your circumstances.
Potentially requested information can include:
- Income documentation
- Employment information
- Bank statements
- Information about the financial hardship
- Mortgage account information
- Other supporting documents
Keep copies of everything you submit and any communication you have with the servicer.
Should You Stop Making Mortgage Payments Before Approval?
No.
Do not simply stop making mortgage payments because you intend to request forbearance.
Continue making payments according to your existing mortgage terms unless your servicer has approved a forbearance or other arrangement that changes your payment obligations.
The CFPB specifically advises homeowners to contact their servicer and understand the available options rather than simply stopping payments.
How Does Forbearance Affect Your Credit?
The effect on your credit depends on the circumstances and how the account is reported.
If you are considering forbearance, ask your servicer how the arrangement will be reported to the credit reporting agencies.
You should also continue monitoring your credit reports for accuracy.
If you enter an approved forbearance arrangement, keep documentation showing the terms and dates of the agreement.
Can You Sell Your Home During Forbearance?
Potentially.
However, being in forbearance does not eliminate the mortgage balance.
If you sell your home, the mortgage generally needs to be addressed as part of the transaction.
For example, if the home’s sale proceeds are sufficient to pay off the mortgage and other transaction costs, the loan can generally be satisfied through the sale.
If the home is worth less than what you owe, the situation can become more complicated.
Talk with your servicer and appropriate real estate and financial professionals before deciding how to proceed.
Can You Refinance After Forbearance?
Potentially, but eligibility depends on your circumstances and the applicable lender requirements.
A recent history of financial hardship or missed payments can affect mortgage qualification.
If you are considering refinancing after forbearance, ask a mortgage professional to review your current financial position before assuming you will qualify.
Factors such as credit, income, equity, payment history, and the status of your existing loan can all matter.
Can You Buy Another Home After Forbearance?
It may be possible, but a recent forbearance can affect your ability to qualify for another mortgage.
Lenders may review your payment history, credit profile, income, debts, and other financial information.
If you are planning to buy another property, discuss your situation with a mortgage professional before beginning the home search.
This can help you understand whether any additional requirements may apply.
What Happens to Escrow During Forbearance?
Escrow can become an important consideration during forbearance.
If your mortgage includes an escrow account for property taxes and homeowners insurance, ask your servicer how those expenses will be handled while your payments are paused or reduced.
A shortage can potentially develop depending on how taxes, insurance, and mortgage payments are handled during the forbearance period.
That shortage could affect your future monthly payment.
The CFPB recommends asking your servicer about the status of your escrow account when discussing repayment after forbearance.
Can Your Mortgage Payment Increase After Forbearance?
It can, depending on how the missed payments and other costs are handled.
For example, if a repayment plan is used, your monthly payment could temporarily increase because you are paying your normal mortgage payment plus an additional amount toward the past-due balance.
An escrow shortage can also potentially increase future payments.
Before your forbearance ends, ask your servicer to explain exactly what your new monthly payment will be.
How Long Does Mortgage Forbearance Last?
There is no single duration that applies to every mortgage.
The length depends on the loan type, servicer, hardship, and applicable program requirements.
Your forbearance agreement should explain:
- Start date
- End date
- Payment amount during forbearance
- What happens to missed payments
- When regular payments resume
- What happens after the forbearance ends
Do not assume the arrangement automatically continues if your financial hardship lasts longer than expected.
Contact your servicer before the agreement expires if you need additional assistance.
What Should You Do Before Forbearance Ends?
Do not wait until the last day.
Contact your servicer before the forbearance period ends and ask what happens next.
Find out:
- When regular payments resume
- How much your new payment will be
- How much you owe from the forbearance
- What repayment options are available
- Whether your escrow payment will change
- Whether additional documentation is required
The CFPB recommends planning for the exit from forbearance before the agreement ends.
What If You Still Cannot Afford the Mortgage?
If your financial situation has not improved, tell your servicer before the forbearance ends.
You may have additional loss mitigation options depending on your circumstances.
Potential options can include:
- Repayment plan
- Payment deferral
- Loan modification
- Selling the property
- Other loss mitigation solutions
The appropriate option depends on your loan and financial situation.
Ignoring the problem can make it more difficult to find a workable solution.
Common Mortgage Forbearance Mistakes
Assuming the Debt Is Forgiven
Forbearance generally delays or reduces payments temporarily. It does not automatically eliminate the amount owed.
Stopping Payments Without an Agreement
Do not assume that simply skipping payments puts you into forbearance.
Get confirmation from your servicer.
Waiting Until the Last Minute
Contact your servicer as soon as you know you may have difficulty making payments.
Not Asking How Repayment Works
Understand exactly how and when the missed payments will be repaid.
Forgetting About Escrow
Property taxes and homeowners insurance still need to be addressed.
Assuming Every Mortgage Has the Same Rules
Forbearance options can vary based on loan type and the applicable program.
Ignoring Your Mortgage Statements
Continue reviewing your statements and account information during the forbearance period.
Questions to Ask Your Mortgage Servicer
Before agreeing to forbearance, consider asking:
- How long will the forbearance period last?
- How much will my payments be reduced or paused?
- Does interest continue to accrue?
- How much will I owe when forbearance ends?
- What repayment options are available?
- Will my monthly payment increase afterward?
- What happens to my escrow account?
- How will the arrangement be reported to the credit bureaus?
- What happens if I still cannot afford my payment when forbearance ends?
- Are there documents I need to provide?
Getting clear answers before agreeing to an arrangement can help you avoid unexpected financial problems later.
How Loan Velocity Can Help
Mortgage hardship situations can be complicated, especially when you are trying to determine whether temporary payment relief or another mortgage solution makes sense.
Loan Velocity provides mortgage financing and guidance for different borrower situations, including purchase, refinance, cash-out, conventional, FHA, VA, USDA, jumbo, and other mortgage options.
If you are experiencing financial difficulty or considering your mortgage options, speaking with a qualified mortgage professional can help you understand what may be available based on your circumstances.
For homeowners who are already struggling to make payments, the mortgage servicer should be contacted directly about forbearance and loss mitigation options.
Conclusion
Mortgage forbearance can provide temporary relief when a homeowner is experiencing financial hardship and cannot maintain regular mortgage payments.
However, forbearance does not erase the missed or reduced payments. Those amounts still need to be addressed through an appropriate repayment arrangement.
Before entering forbearance, understand how interest, escrow, credit reporting, and repayment will be handled.
Most importantly, communicate with your mortgage servicer early and create a plan for what happens when the forbearance period ends.
Taking action early can give you more time to understand your options and work toward a solution that helps protect your home and long-term financial stability.
