Loan After Mortgage Forbearance

Qualifying For FHA Loan After Mortgage Forbearance

Gustan Cho Associates are mortgage brokers licensed in 48 states

This BLOG On Qualifying For FHA Loan After Mortgage Forbearance Was UPDATED On December 3rd, 2018

There are times throughout your life that an emergency happens which causes financial hardship.

  • Events like job loss, divorce, death in the family, and natural disasters like hurricanes happen unexpectedly
  • These events can affect income stream causing to be late on mortgage payments as well as other bills

Forbearance Versus ForeclosureHow to qualify for an FHA loan after granting a mortgage

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 lenders
  • Lenders will work with borrowers in suspending the borrower’s regular scheduled payment
  • Payments can be in forbearance until the borrower is back on his or her feet

Example of Forbearance

For example, when Hurricane Sandy struck the eastern border of the United States a few years ago.

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
  • This was because their employer were shut down due to the damage caused by the hurricane
  • Others had their homes severely damaged
  • Homeowners who lived in other states besides the east coast were affected
  • This was because their employment headquarters were located on the eastern states affected by Hurricane Sandy
  • JP Morgan Chase and other lenders were extremely understanding
  • They were generous in offering a forbearance to those affected homeowners
  • Mortgage payment history on borrowers credit report were not reported late

Requirements For Mortgage ForbearanceWhich means an example of 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 mortgage payments and request a forbearance, the 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
  • See what types of programs they have to offer
  • 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 lender and all of creditors as well prior to being late
  • They will appreciate it and will be more willing to work with you

Mortgage Forbearance Versus Loan Modification

A mortgage forbearance is when the lender gives the homeowner some time to get their finances together due to the following:

  • Loss of job
  • Medical reasons
  • Gap of employments
  • Divorce
  • Other extenuating circumstances

Mortgage forbearance normally are short term workouts on homeowner’s loans. Once the forbearance period is over, the homeowner can pay the amount in arrears all in one lump sum or make payments over a short period of time.

With loan modifications, the homeowner is not required to pay the amount in arrears. This is because they do not have the means to catch up on their arrearage.

Here is how loan modifications are done:

  • Lenders will want to see the homeowner’s financials and the reason why they fell behind
  • The lender will come up with a reduction of the homeowner’s monthly P.I.T.I. 
  • The reduction is normally done by the reduction of interest rates or extending the term of the home loan
  • There is normally a three month trial period
  • If the trial period is successful, the loan modification is finalized
  • The payments that are behind can either be forgiven
  • Or added to the back of the loan
  • Or spread out for a certain period of time with a loan modification

Qualifying For FHA Loan After Mortgage Forbearance And Loan ModificationWhat is the difference between forbearance mortgage and loan modification

Home buyers can qualify for a FHA Loan After Loan Modification one year after the loan modification and need to provide  the lender with 12 months of timely payments.

  • Home buyers can qualify for a FHA Loan with no waiting period after a mortgage forbearance
  • But most lenders want to see 12 months of timely payments
  • Borrowers can qualify for FHA Loan with prior mortgage late payments
  • But most lenders want to see timely mortgage payments in past 12 months
  • Many lenders will not accept borrowers who had a 120 day late payments on mortgage
    • This is because they consider this a pre-foreclosure even though foreclosure proceedings were not initiated
  • This is not a HUD Guidelines but a lender overlay
  • Borrowers can qualify with a 120 day mortgage late payments as long as it has been seasoned for 12 months

Borrowers who had 120 days late payments on their mortgage payment history but has been current the past 12 months and are denied a FHA Loan can qualify for mortgage. If borrowers are told that is a pre-foreclosure by lenders, they are wrong. Please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at We are available 7 days a week, evenings, weekends, and holidays.

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  1. I had a forbearance on my home and it is paid , Now I am co singing for one of my kids the loan has been approved, now FHA wants my next month payment made be for they will approve the the loan and I can not prepay the payment so that we can close on the home

    Is this the way it works?

    What can I do?.

    1. There is a three month waiting period to qualify for a home mortgage after forbearance. You need to make three consecutive monthly payments and cannot pre-pay the whole three months upfront. Yes, this is how it works with the CARES ACT forbearance program.

  2. What happens when you sell your home while you are in forbearance. The full amount of forbearance gets paid with proceeds of the sale. Can you purchase a new home?

    1. Yes, you can and there is no waiting period if you pay all the balance of the forbearance.

  3. I have a borrower who had a forbearance; followed it to the letter caught up and made first payment due 9.21. Lender has reported 30 days lates since 4.2020.

    The lender has been asked repeatedly to remove the lates; each time saying it will take 30 to 60 to 90 days and nothing gets removed.

    Last late showing is 7.2021 of which we have a letter from the lender from Sept. 2021 that they would removed it. Not removed. Borrower made June 2022 payment so they now have 12 months of on time payments. We have been able to get August 2021 and Sept. 2021 payments removed but lender refuses to remove the remaining making the borrower wait 30/60/90 days again. When they haven’t followed through in the past makes me unsure if they will this time. Thoughts?

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