Special Loan Forbearance
A special forbearance is a written agreement between your mortgage lender and you. To get a special forbearance, here are some conditions you need to meet:
- Your loan must be delinquent for at least 90 days. It cannot be more than 365 days late.
- Your loan must not be in foreclosure. Foreclosure may be suspended in order to start your special forbearance.
- The lender must give you debt relief not offered under an informal forbearance plan.
- The maximum about delinquent must not be more than 12 months worth of house payments. These house payments include principal, interest, taxes and insurance.
- The special forbearance plan must reinstate the loan on a pre-arranged time table. After you are caught up, you may get a loan modification.
- You must prove you had a loss of income or increase in expenses that led to your loan default. You must also show that your income is high enough to reinstate the loan according to the plan.
- During the forbearance, you must live in the property as your primary residence. After the forbearance is executed and your loan is reinstated, you may sell the property.
- The property must be inspected and be in acceptable condition for you to qualify. Some specified repairs may be part of the forbearance plan.
- Your written agreement with your lender must include the term, frequency of payments, and amount of payments due. Your agreement will include any mortgage payments you’ve already missed, and there will be a disclosure that if you don’t succeed in the forbearance plan, your home may be foreclosed.
Your lender will be able to get special incentives from HUD if they offer you a special forbearance that saves your home. This can be a good option if you meet all of the requirements, so talk to a housing consultant from a HUD-approved agency to find out more about a special forbearance and whether you might qualify.