Stop Foreclosure: FORBEARANCE PLAN

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Another way to stop foreclosure is by working out a forbearance plan. A forbearance plan (also known as a workout plan) is an agreement a borrower makes with the foreclosing lender to repay the arrears or the amount of money the borrower is behind. It means you are allowed to delay or reduce payments for a short period, with the understanding that another option will be used at the close of that time to bring your account to a current status. If in agreement, you lender will then temporarily cease legal actions. Lenders may agree to combine your Forbearance with Reinstatement or a Repayment Plan if you know you can provide the needed funds to bring your account current by a specific date. This plan works for people who have just experienced income loss or a sudden living expense increase.

Different lenders have different ideas for what they consider to be a forbearance plan. In some instances a lender calls a ‘repayment plan’ a ‘forbearance plan’, also consider a modified payment a forbearance plan, their only similarity is the fact that it is temporary usually 3 months and once complete homeowner is not current and gets a loan modification.

A forbearance plan will provide the customer or homeowner to time to stabilize their income. During the forbearance period, the customer’s are reduced, in some instances suspended, or in some situations regular monthly payments are accepted establishing a payment history. If a homeowner is able to keep up with the forbearance plan, the loan will be reviewed for a loan modification or other workout option as appropriate to stop foreclosure.