What is a Forbearance?
There are times throughout your life that an unexpectant emergency happens which causes financial hardship. Events like job loss, divorce, death in the family, and natural disasters like hurricanes happen unexpectedly and can affect your income stream causing you to be late on your mortgage payments as well as you other bills.
Forbearance in lieu of Foreclosure
When a negative event happens in your life and you feel that your financial situation will change for the worse, please contact your mortgage lender and ask them for a temporary forbearance. A forbearance is a temporary relief by a mortgage lender where the lender will work with the borrower in suspending the borrower’s regular scheduled payment until the borrower is back on his or her feet.
Example of Forbearance
For example, when Hurrican Sandy struck the eastern border of the United States last year, JP Morgan Chase and other banks developed a natural relief program for homeowners where they offered a 90 day forbearance until the affected homeowners recovered. Many victims of Hurricane Sandy were temporary out of work because their employer were shut down due to the damage caused by the hurricane while others had their homes severely damaged. Homeowners who lived in other states besides the east coast were affected also because their employment headquarters were located on the eastern states affected by Hurricane Sandy. JP Morgan Chase and other mortgage lenders were extremely understanding and generous in offering a forbearance to those affected homeowners.
Requirements for Forbearance
One of the requirements of being granted a forbearance is that the homeowner be current with their mortgage payments when requesting for a forbearance. If you are behind on your mortgage payments and request a forbearance, your forbearance request will not be granted. So if you anticipate any financial hardship and think you will be late with future mortgage payments, you need to contact your mortgage lender immediately and see what types of programs they have to offer. Mortgage lenders do not want your house. They want to work with homeowners and will do anything possible to work with them. Repayment plans can be adding the arrearage amount back to the loan amount or an extended payment plan. I strongly recommend to contact not just your mortgage lender, but contacting all of your creditors as well prior to being late. They will appreciate it and will be more willing to work with you.