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Mortgage Forbearance Agreement

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Mortgage Forbearance Agreement

What Does Mortgage Forbearance Agreement Mean?

An agreement made between a mortgage lender and a delinquent borrower by which the lender agrees not to exercise its legal right to foreclose on a mortgage and the borrower agrees to a mortgage plan that will, over a specified period, bring the borrower current on his or her payments. A forbearance agreement is not a long-term solution for delinquent borrowers; it is designed for borrowers who have temporary financial problems caused by unforeseen problems such as temporary unemployment or health problems.

Investopedia explains Mortgage Forbearance Agreement

Borrowers who are faced with mortgage financial problems such as having chosen an adjustable-rate mortgage on which the interest rate has reset to a level that makes the monthly payments unaffordable usually must seek remedies other than a forbearance agreement.

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