Forbearance is Not Forgiveness - Service First Mortgage

As our nation continues to work through the COVID-19 situation and the financial hardships that accompany it, there is a rising misconception around mortgage forbearance that could get borrowers in trouble for not making payments.

What is forbearance?

Mortgage forbearance is an agreement when a borrower has challenges making his or her payments due to financial hardships. The lender agrees to reduce or even suspend payments for a period of time and will not foreclose on the house during the forbearance period.

A forbearance plan provides temporary relief for a short term hardship. A forbearance plan does not address the manner in which the missed payments will be caught up.

Forbearance DOES NOT Mean Forgiveness

You are still responsible for full loan balance, plus any missed principal, interest, taxes, and insurance. Those missed payments do not go away.

Clay West

Director of Servicing and Secondary Marketing

Example Scenario

Joe’s monthly mortgage payment is $1,500 and he needs to request forbearance for 6 months. His servicer accepts his forbearance request and lets him defer payments for 6 months. When the forbearance period is up, Joe will still need to address $9,000 of missed mortgage payments. 

Joe’s options are to reinstate in full, establish a repayment plan, or ask his mortgage servicer for a loan modification. Common features of loan modifications include: increasing the loan’s principal balance, extending the term of the mortgage, or increasing the monthly payment due to an escrow shortage.

If you have the means to make your mortgage payments, it is in your best interest to continue making payments as usual.

For those who truly need help making your mortgage payment, please reach out to your loan servicer to talk through your options.


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