Forbearance, Repayment, & Loan Modification

I’m in forbearance and in an adjustable rate mortgage that will jump again to 10.125 in December?  I would like my interst rate lowered, but can’t refinance.  We can afford our home, but with the jump in interest and my husband being out of work for the past year because of his back we are in fear of losing our home.

Kim

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Hi Kim,

What many lenders characterize as ‘forbearance’ is simply a ‘repayment plan’.  A true forbearance plan temporarily reduces or suspends the mortgage payment and is then combined with a repayment plan so that there is a period of lower-than-contractual payments (the forbearance) and then a period of higher-than-contractual payments (the repayment). 

You need to convert your forbearance plan into a loan modification.  The loan modification permanently modifies the note.  In your case, it would prevent the rate from increasing in December and could capitalize any delinquent payments. 

Contact your lender’s loss mitigation department and insist on a workout package for a loan modification. 

Thanks for the questions and hope this helps.

Paul