The government has the power to stop a foreclosure, but there are ways that it can be delayed. One of these is forbearance. When you are experiencing tough economic times and cannot afford the higher mortgage payments, consider putting your home on forbearance, which will allow you to lower your regular monthly payments by giving out time before the foreclosure process starts. However, there are numerous disadvantages to this option.

You may be able to postpone the foreclosure process, but that does not mean that you can keep your home when the forbearance period ends. If you are unable to sell your house in time before the forbearance period ends, then you will have to deal with foreclosure proceedings unless the lender decides to extend the forbearance option again.

CAN YOU PUT MY HOME ON FORBEARANCE?

With so many different options available, this question depends on your situation and specific situation. If you have problems with your current mortgage payment and are unsure if you can afford the higher payments, talk to your lender. Find out what kind of forbearance options they offer, such as deferment or forbearance. You might consider forbearance if you face foreclosure and need time for a loan modification and other alternative housing solutions before a foreclosure is imminent.

Putting your property on forbearance starts by writing a forbearance agreement to the lender. Upon completing a forbearance form, mail it to your lender, who will promptly hold it for review. When you receive the request from your lender, and if it is acceptable, you must follow through with the agreement and write another agreement as soon as possible (within 30 days) unless they notify you otherwise. In most cases, you will have some temporary delay before foreclosure proceedings begin and a specific date of when you need to start the foreclosure action.

HOW WILL IT AFFECT THE PROCESS?

When you are putting your home on forbearance, you are extending the time you will manage to pay your mortgage payments on time. Remember that forbearance does not eliminate all of the associated costs of having a home, such as property taxes and hazard insurance. To maintain a good record with your lender, you should pay property taxes and homeowner’s insurance during this period. If you do not have about 60% equity in your home or if you owe more than what it is worth, then a forbearance agreement cannot be granted. Keep in mind that this option may only last from three to 12 months, depending on the lender and local laws. Here are some ways that forbearance can affect selling your home:

FORBEARANCE WILL GIVE THE MARKET MORE TIME TO IMPROVE

If the economy is worsening or there is another significant event soon, like war, terrorism, or natural disaster—waiting could help you sell your house when prices are at their highest point. It also means that any homes that come on the market in this period will have less competition and make it easier for buyers to make offers if there is a bidding war.

FORBEARANCE CAN HELP YOU AVOID THE POSSIBILITY THAT INTEREST RATES COULD INCREASE.

Specifically, if interest rates rise, your ability to save money for a down payment will be reduced, and you will have less equity to put toward house sales. Historically, when the economy is slowing down, fewer houses are selling each month. Having more time to sell your home will mean better odds of selling it at the best possible price if interest rates rise and you want to keep it on the market—and in good condition—until then.

FORBEARANCE CAN ALSO HELP YOU AVOID DEALING WITH A REAL ESTATE AGENT (OR MORTGAGE BROKER)

Many real estate agents are more experienced with the market in a booming economy than in a downturn. If you have to wait until the market improves, you will have more time to find a real estate agent better suited for your particular circumstances. Also, mortgage brokers—who help clients get loans for houses—are often more aggressive about getting loans approved in a booming economy but are less inclined to approve loans when the market is slow. That means waiting can give you more time to go after loans that fit your particular situation and will help you avoid paying fees or higher interest rates that come with getting those loans later on.

FORBEARANCE CAN HELP YOU AVOID HOMEOWNERS’ ASSOCIATION FEES.

When you sell a home quickly, you will not have time to avoid dealing with the fees and assessments of any homeowners’ associations that might apply to your property. However, if there is a fee for leaving a home owner’s association, it can be very costly—especially when interest rates are high or if you need money for another home purchase. Waiting until the economy improves could mean that you would not have to deal with this fee in the first place.

FORBEARANCE CAN HELP YOU AVOID THE COSTS OF ACCELERATING YOUR MORTGAGE.

If you are trying to hold on to your home, you may have the option of paying off your mortgage early. However, paying extra on your mortgage when high-interest rates can be expensive. For example, if a homeowner has a $200,000 30-year mortgage at 5% interest and puts an extra $100 a month toward their mortgage, after one year, they will have saved only $1,158. It would take ten years of that person paying that much each month before they would save enough to cover half of the closing costs on a new home—and it would take them 18 years before they break even on that extra payment.

HOW DO YOU QUALIFY FOR FORBEARANCE?

A lender will typically grant a request from a borrower to be placed on forbearance only when the lender is extremely lenient. You should be aware that you will most likely have to pay a few fees, such as a stop-payment fee, attorney fees, and administrative costs. In addition, having your property on forbearance may not help you pay off your mortgage at all. You will probably have to make payments to the mortgage company even when placing your home on forbearance. These payments are calculated based on the amount of money owed by the borrower and what that amount would be if it were reduced by 10%.

CAN YOU STOP THE FORECLOSURE BY GOING ON FORBEARANCE?

You may be able to stop or postpone a foreclosure with an option like forbearance, but will it stop a lender from taking your home? That is not a clear-cut answer. In some cases, you must have enough equity in your home to qualify for forbearance approval. In other cases, you must be willing and able to pay the homeowner’s insurance and taxes on the property during this period. If you do not meet such requirements, placing your home on forbearance is not likely to stop a foreclosure.

WILL PUTTING MY HOME ON FORBEARANCE/FORBEARANCE STOP FORECLOSURE?

If you have problems making your mortgage payments, forbearance may be viable. If you are in a very precarious financial situation, even with the forbearance, it is best to contact a foreclosure attorney and see what they suggest regarding alternative options and whether the lender will grant another set of terms.

Putting your property on forbearance or forbearance may help prevent a foreclosure from occurring. However, if you lose your home anyway and it proceeds through foreclosure, nothing can be done about that. At the very least, you have a few more months to figure out some new plan of action and are not quite ready as you may be with an impending foreclosure. It is still imperative that you contact your lender and try to work out a payment plan before you lose your home. That is especially true if your mortgage payments have not been current for over 60 days. In most cases, this will begin the foreclosure process, and it is best to avoid it in the beginning by contacting your lender and trying to find an alternative solution.