Patrick Duffy's Real Estate Blog

Foreclosure Alternatives: Forbearance

Our second foreclosure alternative to look at is forbearance (or repayment plan).  Think of forbearance as reinstatement on a payment plan rather than in one lump sum.  Much like the reinstatement we looked at yesterday this is a good option for homeowners experiencing a temporary hardship and the homeowner will be required to pay their lender what they are owed.

In some cases the lender will tack the missed payment and fees onto the end of the scheduled loan amortization, however it is much more likely to be given a period of time in which to pay the delinquencies.  Forbearance will often require income documentation from the homeowner showing that they have the wherewithal to comply with the terms of the repayment plan.

Forbearance Example
Homeowner misses four payments on a $2000 per month mortgage and the foreclosure process has been started.

Reinstatement Amount

The lender allows payments to be broken up over the next 12 months:

Once the homeowner completes the 12th repayment, the mortgage would go back to its original amount.

NOTE: a mortgage will not be fully reinstated until the payments are made in full.  If the homeowner misses just one payment along the way, they can end up in the same stage of the foreclosure process they were in prior to the forbearance plan.

If you or someone you know is falling behind on their mortgage, please contact me at 703-403-0536 / patrick@patrickduffyrealtor.com.  Additional foreclosure information can be found at www.NorthernVaShortSaleHelp.com.