What is the difference between a loan modification and a forbearance agreement?
Loan modifications are meant for people who will never be able to repay or catch up on their mortgage loan, and therefore need long-term help. A forbearance agreement provides relief to people who are only temporarily experiencing financial hardship. Forbearance allows homeowners to delay making payments until they are able to recover financially. Outlined in the forbearance agreement is the set amount of time the homeowner has to overcome their financial troubles and get back on track. After this time, the homeowner will be required to pay their debt/mortgage payments. A loan modification doesn’t require the homeowner to pay back their debt/delinquent payments.
