FORBEARANCE AGREEMENT

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If you don’t qualify for a loan modification, then the Forbearance Agreement may be better for you. The Forbearance Agreement is a worked-out agreement with the bank. Here is how a forbearance agreement works. The bank will ask for attorney fees and then approximately 40% to 50% of the back payments. The remaining back payments will be equally divided between the next 6 to 12 payments, raising your monthly payment for that 6 to 12 month time. At that time, the payments will return to their former lower payments.

Remember these 2 important points:

1. 90% of homeowners fall out of their forbearance agreement in the first 2 to 3 months because of failure to pay.

2. Just because you worked out a deal with the bank, doesn’t mean you’re out of foreclosure. You are still in foreclosure until your increased payments are made. Then and only then, will you receive a foreclosure withdrawal letter from the bank, stating your loan is current. In the meantime, the bank will keep extending the foreclosure sale date every month.