What is a mortgage forbearance agreement?
A mortgage forbearance agreement is a temporary arrangement between a mortgage servicer and a borrower who is behind on—or expects to be unable to make—mortgage payments. Under forbearance the servicer agrees not to pursue foreclosure and typically reduces, pauses, or delays payments for a set period. The missed payments are not erased; the borrower must later make up the missed amounts according to terms in the agreement or by using a repayment solution offered at the end of the forbearance.
Key takeaways
– Forbearance is short-term relief, intended for temporary hardships (job loss, illness, pandemic disruptions). It is not a long‑term fix for unaffordable payments.
– With most forbearances interest continues to accrue and missed payments become due later.
– Federally-backed mortgages (FHA, VA, USDA, Fannie Mae, Freddie Mac) received special COVID-era protections; private loans may have servicer-offered forbearance but are not bound by the same federal rules.
– Servicers may not require a lump-sum repayment of deferred amounts for federally-backed mortgages at the end of COVID-era forbearances; several repayment options are typically available.
– If you believe you’ve been discriminated against, you can file complaints with the Consumer Financial Protection Bureau (CFPB) or HUD.
How a mortgage forbearance agreement works
– Borrower notifies the mortgage servicer of financial hardship and requests forbearance.
– The servicer evaluates the request (for COVID-era federally backed forbearance a simple attestation of hardship was allowed) and approves or offers terms.
– The servicer suspends or reduces payments for the agreed period and typically agrees not to start foreclosure while the forbearance is in effect.
– At the end of the forbearance the borrower must repay the deferred amounts. Repayment solutions depend on the loan type and servicer policies.
Forbearance vs. loan modification
– Forbearance: Temporary reduction or suspension of payments. Missed payments remain due later. Intended for short-term hardship.
– Loan modification: Permanent change to loan terms (lower rate, extended term, convert to fixed rate) to reduce monthly payments long-term. Requires eligibility review and documentation, often involves a trial payment period.
COVID-19 mortgage forbearance (overview)
– The CARES Act and subsequent policy actions provided special protections for federally-backed loans beginning in March 2020. Borrowers with FHA, VA, USDA, Fannie Mae, or Freddie Mac loans who experienced hardship related to the pandemic were eligible for forbearance.
– For federally-backed loans during the pandemic period, servicers could provide an initial forbearance of roughly 3–6 months with the option to extend. In many cases total forbearance could be extended up to 12 months; depending on timing and program rules some borrowers were able to get up to 18 months of forbearance.
– The law and agency guidance also limited servicers’ ability to require borrowers to pay the entire deferred balance in a lump sum at the end of forbearance, and provided a menu of repayment options.
Eligibility
– For federally-backed loans: eligibility during the COVID-19 relief programs required the borrower to attest that they experienced financial hardship directly or indirectly because of the pandemic. Servicers generally could not demand proof beyond the attestation for initial COVID forbearance.
– For private (non-federally-backed) loans: eligibility and terms are determined by the servicer/creditor; servicers are typically required to discuss options with borrowers but are not mandated by federal pandemic rules to provide a particular forbearance.
Deadlines to apply (COVID-era rules)
– FHA, VA, and USDA initially set deadlines for requesting forbearance related to those programs (initial federal deadlines were extended during 2021), while Fannie Mae and Freddie Mac allowed borrowers to request COVID-related forbearance without a set deadline.
– Private loan servicers set their own application windows (if any).
Note: These deadlines applied to specific COVID-era programs. If you need relief now, contact your servicer—programs and timelines vary.
Length of forbearance
– Typical initial agreements were 3–6 months. Federal guidance allowed extensions so total COVID-era forbearance could reach 12 months in many cases; in some circumstances, when forbearance began earlier in the pandemic, borrowers could get up to about 18 months in total. Private servicers’ terms vary.
Other provisions common to COVID-era forbearance agreements
– No requirement to repay all deferred amounts in a single lump sum for federally-backed mortgages.
– Servicers had to provide clear information about end-of-forbearance repayment options.
– Servicers generally could not charge late fees and were restricted from reporting a borrower as delinquent to credit bureaus during an approved forbearance period (varied by program and timing).
– Additional protections and resources were created (see Homeowner Assistance Fund).
Homeowner Assistance Fund (HAF)
– The American Rescue Plan created the Homeowner Assistance Fund (about $9.9 billion) to distribute money to states and territories to help homeowners avoid foreclosure and eviction. Funds can be used to prevent delinquencies, cover past-due mortgage payments, HOA fees, utilities, and other housing-related expenses in certain circumstances.
– Availability, eligibility, and application processes depend on state-administered programs; check your state’s HAF portal for details.
When forbearance ends: typical repayment options
Servicers must offer a plan to resolve the missed payments. Common options include:
– Repayment plan: Resume regular payments plus small additional amounts each month until deferred amounts are repaid.
– Lump-sum repayment (reinstatement): Pay all missed payments, fees, and interest at once to reinstate the loan.
– Loan modification: Permanently change the loan terms to incorporate the missed amounts or make monthly payments more affordable.
– Deferral/forbearance repayment (e.g., partial claim for FHA loans): Move the deferred amount to the end of the loan or into a separate subordinate lien payable when the loan ends or the property is sold.
Not all borrowers qualify for every option; eligibility varies by loan program and servicer.
Warnings and consumer protections
– Forbearance is not forgiveness: deferred payments must be repaid or otherwise resolved.
– Interest may continue to accrue during forbearance, increasing the total owed.
– Beware of scams: never pay a fee to get forbearance. Work directly with your mortgage servicer or a HUD-approved housing counselor.
– If you suspect discrimination (race, religion, sex, marital status, receipt of public assistance, national origin, disability, age), you can file complaints with the CFPB and HUD.
Practical steps: what to do if you can’t make mortgage payments
1. Identify your loan type and servicer
– Check your mortgage statement or the closing documents to know whether your loan is FHA, VA, USDA, Fannie Mae, Freddie Mac, or private.
2. Contact your mortgage servicer immediately
– Ask for loss mitigation or forbearance options. Early contact gives you more options.
3. Explain your hardship clearly
– For COVID-era federally-backed options, a simple attestation of pandemic-related hardship was sufficient. For non-COVID hardship, be prepared to describe the situation and provide documentation if requested.
4. Get the offer in writing
– Do not rely on verbal promises. Confirm start and end dates, how interest will be handled, and any fees.
5. Keep records
– Save all correspondence, dates/times of calls, the person you spoke with, written agreements, and evidence of payments.
6. Ask about end-of-forbearance options now
– Understand the solutions available at the end (repayment plan, deferral, modification) and any eligibility rules.
7. Talk to a HUD‑approved housing counselor
– Housing counselors provide free or low-cost guidance and can help you evaluate options and complete paperwork. Find one at HUD.gov.
8. Explore state and federal assistance (HAF and others)
– Check whether your state’s Homeowner Assistance Fund or other programs can help with past‑due amounts or transition to a more sustainable payment plan.
9. Avoid scams and paid “rescue” services
– Do not pay anyone upfront promising to stop foreclosure or obtain forbearance. Use your servicer or an approved counselor.
10. If you run into problems with your servicer
– File a complaint with the Consumer Financial Protection Bureau (consumerfinance.gov/complaint) and consider legal aid or a housing counselor.
Sample script to request forbearance (brief)
“Hello, my name is [Name]. I have loan number [X]. I am experiencing a financial hardship because [reason, e.g., job loss, COVID-19 illness, medical bills] and need help with my mortgage payments. What forbearance or loss mitigation options are available? Please send any decision or agreement to me in writing.”
When to get professional help
– If your servicer will not offer options or threatens foreclosure despite an approved forbearance request, contact a HUD‑approved counselor or an attorney who specializes in housing/foreclosure law.
– If you suspect discrimination or servicer noncompliance, file complaints with the CFPB and HUD.
Sources and where to get help
– Consumer Financial Protection Bureau (CFPB) — Learn About Forbearance: https://www.consumerfinance.gov/ask-cfpb/category-mortgages/
– CFPB — Mortgage Forbearance During COVID-19: What to Know and What to Do: https://www.consumerfinance.gov/consumer-tools/mortgages/mortgage-forbearance/
– U.S. Department of the Treasury — Homeowner Assistance Fund: https://home.treasury.gov/policy-issues/coronavirus/assistance-for-small-businesses/homeowner-assistance-fund
– Federal Trade Commission — Mortgage Discrimination: https://www.consumer.ftc.gov/articles/0300-mortgage-discrimination
– The White House — Actions to prevent foreclosures (COVID-era fact sheets and updates): https://www.whitehouse.gov/
– U.S. Congress — CARES Act (H.R. 748): https://www.congress.gov/bill/116th-congress/house-bill/748
– HUD — Find a HUD-approved housing counselor: https://www.hud.gov/find-a-housing-counselor
Final note
Forbearance can provide critical breathing room during a temporary financial crisis, but it is a pause, not a pardon. Act quickly, document everything, explore all follow-up options (repayment plans, modifications, assistance programs), and seek help from HUD‑approved counselors or legal aid if you are unsure which path is best.