How to Negotiate an Informal Forbearance Plan

Falling behind on mortgage payments is serious business. If you fail to cure the deficiency, then you could lose your home to foreclosure. If a temporary setback such as an unexpected major expense has caused you to fall behind, you may be able to catch up on payments through an informal forbearance plan.

This type of plan is frequently agreed upon by lenders because it does not require a formal loan modification or other major solution. Instead, this is often a verbal agreement between you and your lender to catch up on your mortgage payments on your own terms.

In order to state your case for such a solution, you should be prepared to demonstrate to your lender how you will be able to catch up your late payments over a period of not more than 90 days. This does not necessarily require that you split the deficient balance over three equal payments either. Instead, you should be able to make extra payments above and beyond your regularly scheduled monthly mortgage payments so that you are considered current within 90 days.

Sometimes just tightening the belt for a couple of months can give you an extra amount to put towards catching up the arrears. A bonus at work or an income tax refund are also ways that you can put extra money towards the deficiency.

If something happens and you are unable to completely catch up on payments within the 90 days as promised, you should continue to communicate with your lender. You may be able to buy some time so long as you are still expected to be able to afford your monthly payments on a permanent basis.

Sometimes a lender may pressure you to split the deficient balance evenly over the next 3 months. However, even FHA forbids a lender from requiring you to do this. Instead, your ability to repay the deficiency will be more important, and your lender should work with you to allow you to get caught up according to your terms over the next 3 months. If you cannot remedy the situation and it becomes hopeless, you should consider other forms of mortgage assistance before your situation gets worse. Unless you take action, you may find yourself proceeding through the steps of foreclosure.

For more severe delinquencies of at least 90 days, a special forbearance or other workout arrangement may be preferred to an informal forbearance.