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Forbearance
What Is Forbearance?
Forbearance is a temporary agreement between a borrower and lender to pause or reduce loan payments during financial hardship.
It applies to:
- Mortgages
- Student loans
- Auto loans
- Personal loans
Forbearance does not erase debt; it delays repayment.
Why It Matters in a Mortgage
Mortgage forbearance can:
- Prevent immediate foreclosure
- Provide short-term relief
- Require repayment plans afterward
- Missed payments may need to be repaid through lump sums, extended terms, or modified payment schedules.
Interest often continues to accrue during forbearance.
How It Works
- Borrower requests hardship review.
- Lender approves temporary relief.
- Repayment plan is established at end of period.
Forbearance vs. Loan Modification
Forbearance → Temporary pause
Loan Modification → Permanent change to loan terms
Purpose and duration differ.
FAQs About Forbearance
Does forbearance forgive payments?
No, the missed payments must eventually be repaid.
Does forbearance affect credit?
Reporting rules vary, but long-term impact depends on repayment handling.
Is forbearance automatic?
It requires lender approval and documented hardship.
Related Terms
