Home Mortgage Forbearance



Forbearance on Loans from the Government
The term forbearance is most often used in the context of a mortgage. In forbearance, there is an agreement between a borrower and the lender where the lender delays a foreclosure. This can happen when a borrower cannot make payments on a loan.
When a lender breaks the payment process agreed upon by the both lender and borrower, the lender has the right to initiate the foreclosure process. It is at this point where forbearance may be put into action in order to avoid foreclosure. The lender is most often inclined to do this if the borrower has the ability to catch up on a payment schedule within a certain period of time. This period of time is discussed and agreed upon by both the lender and the borrower.

Forbearance on Student Loans
Forbearance is most commonly provided by the government on student loans. When a borrower is willingly but temporarily not able to make either partial or full payments, and is also not eligible for a deferment plan, a lender may be able to grant forbearance.
Some reasons for getting forbearance include illnesses, continuing education such as a dental or medical residency, financial hardship, military mobilization, or a national or local emergency.
During this time, a loan can still accumulate interest. However, it may allow a temporary stop on loan payments or a temporary reduction on the size of the payments. It can also extend the time given for making payments as well. 
Receiving forbearance depends on many different factors. One example is what sort of loan was received and whether it was a federal loan or a private loan. Federal loans include Perkins loans, Stafford loans, and PLUS loans. Meanwhile there are alternative private loans that can be received through banks and other financial institutions. Forbearance for these loans are up to the institutions that give them out.
The requirements for forbearance on a student loan includes currently being in repayment and being willing yet unable to pay monthly scheduled payment due to temporary financial struggle. Other factors of eligibility include having loan payments that are more than a fifth of a borrower’s gross income, being a member of AmeriCorps, or participation in the Teacher Loan Forgiveness program.
If a borrower is qualified, they must then choose to either stop making payments on a temporary basis or to make smaller payments for a selected time period. The application for forbearance only lasts for a year so it must be reapplied for annually.
When considering forbearance, there can be some disadvantages that must be considered. For example, it is not a solution for long term financial struggle. The interest received during the time period may aggravate the financial hardship as well. In the case of private loans, there may be a fee for forbearance, which can be very detrimental as well.