Mortgage forbearance is designed for borrowers who are facing a financial hardship to help them avoid defaulting on their loans.
Common reasons why people turn to forbearance include:
- Homes damaged or destroyed in natural disasters
- Loss of income
- Medical issues
- The death or illness of a co-borrower
- Separation or divorce
- Job relocation
- Increased expenses
The two most common types of forbearance plans are Pausing Payments and Reduced Mortgage Payments and are determined on a case by case basis with the lender.
Repayment options also vary and could include a lump sum payment, extended terms, and payments spread out over time.
As a result of the coronavirus pandemic, under the CARES Act, homeowners with government-backed mortgages are eligible for mortgage forbearance.
Forbearance plans under the CARES Act may have different rules than forbearance plans not covered under the CARES Act.
It is important to contact your lender if you think you are eligible for a mortgage forbearance plan.