The possibility of losing your home because you can’t make the mortgage payments can be a difficult experience. You might be one of the many people who had a fixed rate mortgage that adjusted to be much higher than you could afford. Or you might be having trouble making ends meet because you or a family member lost a job. There are options that can help you – two of the most common solutions are a loan modification and a forbearance agreement.

A forbearance agreement is an agreement by the Servicer to postpone, reduce or suspend payment(s) due on a loan for a limited and specific time period.

A Loan modification is a permanent change in one or more of the terms of a Borrower\’s loan, allows the loan to be reinstated, and results in a payment the Borrower can afford.

This information is important, because many times the lender wants to push a forbearance on homeowners, when what you are requesting is a loan modification. Stand your ground, and if you have to, request to speak with a supervisor. Also, make sure you are talking to Loss Mitigation and not the Collections Department. They will remind you on every call that they are collectors. Their job is to try to collect as much as possible, and guess what? A forbearance does just that. It is the Collections Department that is trained to do this.

A Loan Modification Agreement is made between a mortgage lender and a delinquent borrower, in which the lender agrees not to exercise its legal right to foreclose on a mortgage. The borrower in turn agrees to the modification one or more terms of the original mortgage to make it more affordable, or save you from losing your home in the case of defaulted payments. This can include adding your past due payments to the end of the loan, lowering your interest rate, extending your mortgage term, i.e., from 30 to 40 years, deferring principal and not making it due until you either refinance, sell, or the term is up (usually with no interest or principal forgiveness (which is rare with most lenders), or any actual term change.

A Forbearance Agreement is not a loan modification. Forbearance is an agreement made between a mortgage lender and delinquent borrower, where the lender agrees not to exercise its legal right to foreclose on a mortgage, and the borrower agrees to a modified mortgage plan that will, over a certain time period, bring the borrower current on his or her payments. A forbearance agreement is not intended to be a long-term solution for delinquent borrowers; it is designed for borrowers who have temporary financial problems caused by unforeseen circumstances, such as loss of employment or health issues. Modifications are handled through the Loss Mitigation department of your lender and forbearance is handled through your lenders collections department.

An additional note about appraised value. When your property value comes is lower than what you owe on your mortgage, it is considered to be “under water” and it actually helps your numbers look better for loan modification purposes. So, don\’t fight a low appraisal value on your property.

Anna Cuevas is America\’s Loan Mod Guru, she has provided experienced insight and expertise to save over 300 families from losing their home to foreclosure, and has successfully returned 14 homes back to homeowners on the verge of eviction after their trustee sale was completed. For more information and resources, visit askaloanmodguru.com.

Anna Cuevas is America\’s Loan Mod Guru, providing experienced insight and expertise to save over 300 families from losing their home to foreclosure, and has successfully returned 14 homes back to homeowners on the verge of eviction after their trustee sale. For information visit http://askaloanmodguru.com.

Author Bio: Anna Cuevas is America\’s Loan Mod Guru, she has provided experienced insight and expertise to save over 300 families from losing their home to foreclosure, and has successfully returned 14 homes back to homeowners on the verge of eviction after their trustee sale was completed. For more information and resources, visit askaloanmodguru.com.

Category: Real Estate
Keywords: forbearance agreement, loan modification,default,refinance