What is a forbearance agreement?

A forbearance agreement is a temporary pause or reduction in mortgage payments negotiated between a homeowner and their lender. Unlike a permanent loan modification, which changes the loan terms for the remainder of the mortgage, forbearance is intended to be short-term relief, usually lasting three to twelve months.

When a borrower enters forbearance, the lender agrees to accept lower payments or no payments during a specified period. The unpaid amounts do not disappear; they are typically added back to the loan balance, either spread across future payments or due as a lump sum when the forbearance period ends. This distinguishes forbearance from forgiveness programs where amounts may be waived entirely.

Forbearance agreements serve homeowners facing temporary income loss, medical emergencies, job transitions, or other short-term hardships. The arrangement keeps the loan current during the difficult period and can prevent foreclosure. However, borrowers must understand the repayment terms clearly: some agreements allow full resumption of regular payments after the pause, while others require a balloon payment or loan modification to accommodate the deferred amounts.

The specific terms vary by lender and loan type. Federal guidelines and state law in New York govern forbearance eligibility and terms for conventional loans, FHA mortgages, and government-backed programs. An attorney familiar with foreclosure prevention can help review forbearance terms and ensure they align with the homeowner's recovery timeline.