What you need to know
A forbearance plan temporarily suspends or reduces the amount of your regular monthly mortgage payment if a life event is expected to decrease your cash-on-hand in the near future. Most often, it is used in times of temporary hardship, like unemployment.
How you could benefit
For a specific period of time, a forbearance plan can provide short-term mortgage payment relief until you're in a better financial situation.
Important considerations in a forbearance plan
- Your regular monthly mortgage payment may be temporarily suspended or reduced for a specific period, allowing time for your financial situation to improve.
- During this time, you'll have a new monthly mortgage payment to make instead of the payment amount that appears on your monthly statement.
- You must contact us on a monthly basis to provide regular updates on your financial status.
- At the end of the forbearance period, the payment amounts that were suspended or reduced during the forbearance period accrue and may be added to your mortgage amount. At that time, we'll work with you and review your financial situation to see if you're able to repay the forbearance amount, or if a long-term option like a loan modification is available to you. If you cannot keep your home, we'll explore options that may help you avoid a foreclosure sale. If long-term assistance is not available to you, the total amount of payments that accrued during the forbearance period becomes due and payable.
How your credit may be affected
- A forbearance plan may initially have a negative impact on your credit score, but it may be less negative than a series of late payments because you have made official arrangements with us.
- Payments during a temporary forbearance are recorded on your credit report as "paying under a partial or modified payment agreement."
- Temporarily suspends or reduces your regular mortgage payment.
- Assists homeowners with short-term challenges.
- Gives you an active role in the process.
- May reduce negative credit impact in the future.
- Helps you avoid a foreclosure sale and move forward sooner.