Forbearance
From Wikipedia, the free encyclopedia
In the context of a mortgage process, forbearance is a special agreement between the lender and the borrower in order to delay a foreclosure.
Loan borrowers sometimes have problems with their payments due to unexpected circumstances. This may cause the lender to start the foreclosure process. To avoid this situation, the lender and the borrower have the option to make an agreement called "forbearance". According to this agreement, the lender delays his right to exercise foreclosure if the borrower could catch-up his payment schedule in a certain amount of time. This time-period and the payment plan depend on the details of the agreement which are accepted by both of the parties involved.
Note that forbearance is just for "temporary" financial problems. If the borrower has more serious problems, for example if it is a variable-rate mortgage and the interest rate become high enough so that the borrower cannot afford the payments anymore, then forbearance is usually not a solution.
[edit] References
- What is Forbearance?. Retrieved on 2008-06-10.
