What is Loan Forbearance?
Loan forbearance is basically when a mortgage holder allows a borrower to delay or adjust their monthly payment, typically for a short period of time, to allow the borrower time to recover from a temporary financial setback while keeping their home.
How do I request forbearance?
The first thing that you need to is to understand what your lender wants: Mortgage holders would rather work with you the borrower to find a solution and avoid foreclosure. The mortgage holder just wants to see that: 1. the loan delinquency was due to circumstances beyond the borrower’s control (injury, illness, job loss or unexpected living expense increase), and 2. That the borrower has a reasonable plan to regain financial security permanently and can be trusted to remain current on the mortgage going forward.
You will need to do some research to get the direct number of the person handling your file. Once you have this, you can request a homeowner’s assistance package. When speaking with your lender make sure to stay upbeat and curious. Do not abandon your property.
It is important to compose a hardship letter. A hardship letter is a formal letter explaining in detail the cause of your temporary situation. In your letter you will also want to mention and explain why your situation is temporary and how you plan to recover.
You will want to review the forbearance agreement carefully and in detail. I also
advise to get legal advice to make sure the agreement is fair and reasonable.
Before you go through this process make sure you will be able to make the future payment, take an honest look at your financial situation. If you are not truly back on solid financial ground then a forbearance agreement may not be your best option.
Some options that may work for you are: