Ordinary people can negotiate mortgage forbearance agreements without the assistance of a lawyer. This may come as a relief to individuals going through the financial and emotional stress of the preforeclosure process. You must, however, apply for foreclosure forbearance before the lender actually forecloses on the mortgage. Foreclosure begins after a homeowner becomes 90 days late or more on a mortgage payment. A foreclosure forbearance agreement is a negotiated payment plan that may reduce the balance and interest rate of a mortgage while at least delaying the process of foreclosure.
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Remain in close contact with your lender if you fall behind in making payments because of a job loss, medical expenses or other major life disruption. Lenders can lose tremendous amounts of money by allowing a home to go into foreclosure, so they have strong incentives to modify the loan. Contact a lender by mail if you believe that you may start to fall behind on your mortgage. The earlier that you inform the lender of your issues, the greater the likelihood that you will be able to successfully negotiate forbearance.
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Unlike a loan modification, the forbearance agreement is not intended to be a permanent alteration to the mortgage. Instead, it's intended to allow homeowners to get a reprieve from the foreclosure process while they recover financial stability. Write a foreclosure forbearance request explaining your financial circumstances after you become late on payments. Explain why you have had trouble meeting your obligations, and outline your plan to repair your financial situation and become current on your mortgage again. Write only between 500 to 1,000 words, and avoid using sentimental language. Describe your situation in terms of the facts only. Estimate when your financial situation will improve.
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Once the bank receives your request for forbearance, a loan officer will decide whether to pursue further negotiations. You may receive an immediate rejection if the lender determines that it can't quantify the risk of extending the mortgage agreement. If the lender chooses to continue negotiating with you, you'll likely be asked to bring information about your finances to a meeting during which you will discuss the details of the forbearance agreement. In general, you will be allowed to make reduced mortgage payments for a period of time while you recover from the event that caused your financial distress.
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