What is "forbearance" in mortgage terms?

Forbearance in mortgage terms refers to an arrangement between a lender and a borrower that permits the borrower to temporarily pause or reduce their mortgage payments, typically due to financial difficulties. This agreement is usually formalized under specific conditions, such as job loss, medical emergencies, or other significant financial hardships that impact the borrower's ability to make regular payments.

The essence of forbearance lies in its role as a way to prevent foreclosure, providing the borrower with a safety net during challenging times. During the forbearance period, the lender may agree not to take immediate action on the missed payments, giving the borrower time to stabilize their financial situation. It is crucial for borrowers to understand that while forbearance may alleviate immediate payment pressures, the payments owed generally need to be made up later, either through a lump sum or modified payment plan.

This understanding of forbearance helps clarify its significance in real estate and mortgage management, distinguishing it from other processes like foreclosure or interest calculation methods, which do not provide the same relief and support to distressed borrowers.