Real Estate Forbearance
Real estate forbearance agreements are used when mortgage borrowers become delinquent with home loan payments. In order to qualify for loan forbearance, homeowners must possess the financial ability to make future payments and work with a bank loss mitigator to devise a repayment plan to cure mortgage arrearages.
When real estate forbearance agreements are issued the mortgage lender agrees not to initiate foreclosure proceedings as long as the borrower complies with payments terms. Mortgage forbearance repayment plans typically extend between three and twelve months.
During the forbearance agreement mortgage payments are either reduced or suspended; allowing borrowers to get back on track and prevent foreclosure. Once mortgage forbearance plans expire, borrowers commence with normal home loan payments.
Real estate deferment plans are legally binding contact between the lien holder and borrower. Bank loss mitigators mediate forbearance agreement mortgage contracts and help borrowers devise a repayment plan. The primary goal of mortgage forbearance is to assist homeowners who have encountered temporary financial setbacks by providing repayment extensions.
Reduced or suspended home loan payments must be repaid through a repayment plan. Some lenders roll outstanding balances to the end of the loan by extending repayment dates. Others require borrowers to pay a portion of mortgage arrearages within a specified timeframe. A few engage in loan modifications or mortgage refinancing.
Repayment plans are required to cure past due mortgage amounts including principal, interest and late fees. These payments are in addition to the borrower's regular home loan payment. To obtain approval, borrowers must be able to prove financial hardships were temporary and they can comply with forbearance terms.
Communication with loss mitigation is the key to obtaining a successful outcome when requesting forbearance mortgage agreements. Contacting lenders at the onset of financial setbacks is also required. Often, loan forbearance is only available to borrowers who are 31 to 60 days delinquent.
Real estate forbearance agreements can be a saving grace. However, homeowners must understand the process and what it entails. When forbearance agreements expire the homeowner must be financially prepared to pay home mortgage payments along with repayment of past due amounts.
Forbearance repayment plans add an additional amount to the monthly home loan payment until mortgage arrears are cured. For example, a borrower enters into a real estate forbearance agreement for six months and defers $10,000 in principal sum, interest and late fees. The mortgage lender institutes a 24-month forbearance repayment plan. The borrower would be responsible for paying an additional $416.67 for two years. Afterwards, mortgage loan payments would revert to the original monthly payment.
Lenders assume risk when engaging in real estate forbearance. If borrowers default on repayment plans the lender will commence with foreclosure proceedings. These costs are added to the outstanding balance due on the mortgage note. The lender must then hold the foreclosed property until market values increase or sell the property at a reduced rate and incur a loss.
If you are facing foreclosure, options exist to help you save your home or reduce financial risks associated with foreclosure. We encourage you to browse our real estate forbearance article library and become familiar with available options.
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Published on November 23, 2009 at 01:23 AM