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Mortgage Forbearance Agreement
A forbearance agreement is
not a long-term but rather a temporary solution designed for borrowers who
experience temporary financial problems. This solution applies to those who
experience unforeseen temporary financial problems such as temporary unemployment or health
problems. The mortgage forbearance agreement allows the borrower to stop
making mortgage payments.
Under the agreement, the
mortgage lender will agree not to proceed with foreclosure and that the
borrower will agree to a mortgage plan that will over certain time bring the
borrower current on his or her payments.
As a result of temporary
non-payment under this agreement, mortgage rates and interest will continue to
accumulate. The unpaid amount will be added to the remaining balance of the
loan. Under the forbearance agreement, you are required to sign the agreement
that indicates when the lender will require you to pay the amount owed. When
the forbearance period expires, you are once again required to make full payments
on your loan.
If your financial troubles
result from choosing a mortgage adjustable rate where the interest rate has
reset resulting in higher unaffordable monthly payments, you must seek a
solution other than the forbearance agreement.
Nevertheless, the mortgage
forbearance agreement is a temporary solution that will buy you time to resolve
your financial situation. This option represents a far better solution than the
negative consequences to foreclosure or walking away from your home.
