What is a Forbearance?

A forbearance is a temporary period of time in which no payments or reduced payments are required because of a financial situation.  There are basically three types of arrangements that can be made under the forbearance provision.  During a forbearance, interest continues to accrue. You may only receive up to 36 months of forbearance over the life of  your loan.

Reduced Payment Forbearance

A reduced payment forbearance is negotiated for a temporary monthly payment, that is generally greater than the monthly accuring interest, but less than the regular payment amount.

Interest Only Forbearance

An interest only forbearance is negotiated for a temporary monthly payment of interest only.

No Payment Forbearance

A no payment forbearance is negotiated for a temporary period in which no payments are required.  Interest continues to accrue and become due at the end of the forbearance period.  This type of a forbearance results in a balloon type payment of the interest that accrued during the forbearance period plus a regular payment.