Mortgage Blog

Loan Modification - Understanding Forbearance

July 16th, 2013 | Short Sales, Loan modification

 The Loan Modification process can be tricky.  I personally do not endorse modifications because I do not believe that they are fair or equitable for the borrowers. Having said that, the process is fraught with risk and you need to understand what you may be getting into if you choose a Modification over a Short Sale.

Forbearance is the lender’s test of your character in their words.  Why should the mighty lender stoop down and bequeath you with a modification when you signed up for the debt.  You owe them money.  This is the lender’s position whether you want to hear it or not.  The primary goal of the lender is to recover their money.  Forbearance is a tool that they use as part of this process.  

It is very common for a borrower with a $3,000 monthly mortgage payment to be told that they qualify for a Loan Modification but before one can be granted the lender will require the completion of a four month Forbearance period. This is a period that may require a significantly higher payment like possibly $4,000 or even $5,000 per month.  If you demonstrate the ability to make these payments, on schedule presumably, the lender will reward you with a Loan Modification based on the character you have demonstrated in paying them the extra money.

The forbearance money you pay is applied to your total amount due on your loan but you have to be aware that even after you complete the forbearance period it is not uncommon for the lender to renege on their verbal offers of a loan modification. Many unsuspecting borrowers with underwater properties and payment affordability issues have discovered this deceit.  My suggestion is that before you agree to any form of forbearance as part of a Loan Modification you think it through completely and understand that the lender is not obligated to grant you a loan modification.  Please beware and don’t allow yourself to be taken advantage of.  
Blogging from the front line of the housing crisis.
George Omilan
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Jefferson Mortgage Group LLC

2536 Leeds Rd.
Oakton, Virginia 22124
FAX: 703-773-6946
NMLS: 935554

Located in Fairfax County, Virginia. Serving all of Virginia, Maryland & Pennsylvania. 


Jefferson Mortgage Group LLC is licensed in Virginia, Maryland & Pennsylvania.
Virginia State Corporation Commission License Number MC-5659 and the Pennsylvania Department of Banking & Securities #46259 
Maryland DLLR License #21586

An Equal Housing Lender

By refinancing the consumer's existing loan, the consumer's total finance charges may be higher over the life of the loan.

This material is not from HUD or FHA and has not been approved by HUD or any government agency.