Key takeaways

  • A mortgage forbearance agreement allows you to temporarily stop making monthly mortgage payments or make smaller payments amid financial hardship.
  • As part of a standard mortgage forbearance agreement, the lender agrees not to foreclose on your home for missed payments.
  • After the forbearance period ends, you'll still need to make up the payments you missed, but there are a couple of ways to do this, including making a lump sum payment.

If you’re concerned about your ability to make your next mortgage payment, you might be able to work with your lender on a forbearance agreement. Doing so can help you avoid late penalties, going into default and foreclosure. To get a standard mortgage forbearance agreement, you must present documentation proving your financial hardship.

What is a forbearance agreement?

A mortgage forbearance agreement is an arrangement between you and your lender to provide temporary relief from paying your mortgage, either by lowering or pausing the payments.

Entering into a forbearance agreement doesn’t mean you’re off the hook for the missed or reduced payments — you’ll still owe the amount you missed later, usually when the forbearance period ends. You can negotiate the details of your forbearance agreement with your lender, but typically, the initial forbearance period lasts between three to six months. The end date will be documented in your ​​forbearance agreement, meaning you’ll start making full payments again at that time.

A forbearance agreement can act as a support system for borrowers who need time to get their finances in order after a temporary hardship, like a job loss. It will not, however, keep you out of foreclosure if you can’t make the agreed-upon payments after your forbearance period ends.

What does a standard mortgage forbearance agreement include?

In a standard mortgage forbearance agreement, the lender typically agrees not to foreclose on the property when you’ve fallen behind on payments. Instead, you and your lender will negotiate an agreement allowing you to make payments under a revised mortgage plan designed to eventually bring you current on loan payments.

This temporary forbearance agreement may include reduced mortgage payments or suspended payments for a set time. Generally, to qualify for this type of agreement, you must be able to demonstrate and submit proof of financial hardship. At the end of the forbearance period that’s been negotiated, you must resume full mortgage payments.

How does a mortgage forbearance agreement work?

A mortgage forbearance agreement is the deal you make with your lender to lower or suspend your mortgage payments temporarily, as well as the timeline and plan for when you’ll resume payments. But before entering into this agreement, you’ll need to ask your lender to put your loan into forbearance. If approved, you and your lender can initiate the mortgage forbearance process, which includes creating the forbearance agreement.

Mortgage forbearance agreement vs. deferment
Mortgage forbearance allows borrowers to stop making monthly payments temporarily. Mortgage deferment is one way to repay the paused payments without interest accruing. With a deferment, your lender adds the owed amount to the end of your loan term, so you won’t have to make extra payments when your regular payments resume (like you would in a standard forbearance agreement).

What does a temporary forbearance agreement look like?

Forbearance agreements differ between mortgage lenders since they’re based on factors such as the investor requirements of your loan and the type of mortgage you have.

Whoever your lender is, your agreement will outline the terms of the forbearance period, such as:

  • The length of the forbearance period
  • How the missed payments will be repaid and any late fees you may be responsible for
  • The amount of payment required during the forbearance period, if any
  • Whether the lender will report the forbearance to the credit agencies
  • Whether interest will continue to accrue on the missed payments

Forbearance agreement FAQ

  • Continue to pay your mortgage until you receive a written notice that the forbearance agreement is in effect. If you don’t, your lender could report those missed payments to the credit bureaus, which could lower your credit score. Make sure to also check your credit report regularly to ensure your lender doesn’t mistakenly report catch-up payments as late ones. Dispute any errors as soon as you can.
  • To request a mortgage forbearance agreement, contact your lender or whoever services your mortgage payments. You will likely need to provide documentation (like a lay-off notice) proving that you’re experiencing financial difficulties, a recent mortgage statement, an estimate of your monthly expenses and your current income.
  • Depending on your lender, you’ll have different forbearance repayment options after the forbearance period ends. There are a few ways to repay what you owe. You can pay it all in one lump sum, tack on the catch-up payments to your existing monthly payment or defer what you owe to the end of the loan term. You can also refinance your loan. In some cases, you can use a loan modification, which changes the terms of your existing mortgage, such as the interest rate.