Mortgage Forbearance Agreement

AAA

DEFINITION of 'Mortgage Forbearance Agreement'

An agreement made between a mortgage lender and delinquent borrower in which the lender agrees not to exercise its legal right to foreclose on a mortgage and the borrower agrees to a mortgage plan that will, over a certain time period, bring the borrower current on his or her payments. A forbearance agreement is not a long-term solution for delinquent borrowers; it is designed for borrowers who have temporary financial problems caused by unforeseen problems such as temporary unemployment or health problems.

INVESTOPEDIA EXPLAINS 'Mortgage Forbearance Agreement'

Borrowers with more fundamental financial problems - such as having chosen an adjustable rate mortgage on which the interest rate has reset to a level that makes the monthly payments unaffordable - must usually seek remedies other than a forbearance agreement.

RELATED TERMS
  1. Delinquent Mortgage

    A mortgage for which the borrower has failed to make payments ...
  2. Grace Period

    A provision in most loan and insurance contracts which allows ...
  3. Judicial Foreclosure

    Foreclosure proceedings in which a mortgage lacks the power of ...
  4. Loan Modification

    A modification to an existing loan made by a lender in response ...
  5. Short Refinance

    The refinancing of a mortgage by a lender for a borrower currently ...
  6. Workout Assumption

    The assumption of an existing mortgage by a qualified, third-party ...
Related Articles
  1. Understanding Your Mortgage
    Personal Finance

    Understanding Your Mortgage

  2. Are You Living Too Close To The Edge?
    Budgeting

    Are You Living Too Close To The Edge?

  3. Make A Risk-Based Mortgage Decision
    Options & Futures

    Make A Risk-Based Mortgage Decision

  4. New Home Repair Troubleshooting
    Home & Auto

    New Home Repair Troubleshooting

comments powered by Disqus
Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  3. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  4. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center