Forbearance Agreement
This bitter word - foreclosure. The frustration it has brought into the hearts and minds of so many lately is overwhelming. If you are one of them, please, try as much as you can to stay calm and keep your mind clear. Don’t let anyone take advantage of your confusion. Remember - lenders are usually happier if you keep your mortgage and finally pay it off, rather then you foreclose and they get your property. There are enough scammers, though, who are exactly after your property - don’t fall into their nets. A cold mind and clear ability to analyze are your best partners against scam.
If you feel that foreclosure may become inevitable, don’t wait until it really is. There is a lot of advice (including the Chapter 13 Bankruptcy option) to be found on the Net and even more in the printed media about why and how to try and avoid foreclosure. I won’t repeat here what has already been said many times. I only want to draw your attention to one of the ways that is not mentioned so very often. Partially, I reckon, because it is targeted on quite a limited circle of borrowers, who have temporary financial problems and only need some additional time to attempt to solve them. For them a Forbearance Agreement can be a lifesaver.
If you have already fallen behind with your payments and thus got disqualified from any other form of an additional loan, a Forbearance Agreement may help you out. Such an agreement can be made between a mortgage lender and a delinquent borrower. The lender agrees not to exercise his legal right to foreclose on a mortgage and the borrower agrees to a mortgage plan that will, over a certain time period, bring the borrower current on his or her payments. In plain English it means, that under certain circumstances and with a certain amount of good will your lender may be interested to cut you some slack on your monthly payments for some while, if you manage to persuade him, that your current uneasy financial situation is about to change for the better and you are sure to restore your solvency in the near future. The proof should be very reliable and impressive. Providing enough relevant documents is the key. If the lender goes for it, the Forbearance Agreement may grant you a few months of lower payments or even no payments at all. The other side of the agreement is the repayment plan, which follows the suspension period. After the agreed upon number of “lite” months, your monthly payments will become higher than they were before, as they will have to include the regular monthly amount plus an extra amount to compensate the lender for the months of underpayment. The total compensative repayment period is usually 12 months, but it may vary. If everything goes well, you should be able to catch up with your original mortgage plan within this time and continue from that point on with monthly payments determined by it. If this is your goal, make sure it is undoubtedly indicated in the Forbearance Agreement contract. Sad but true, some lenders may want to take advantage of your situation and push highly unfavorable conditions on you just because they know you have nowhere else to go. Some firm but polite argumentation of your position may help you to make the lender more reasonable in his demands.
