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12.2.7.4 Mortgage Forbearance

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Forbearance is not required but is “highly encouraged.”244 The servicer should consider the effects of the disaster, the borrower’s financial circumstances, the status of the loan, and the availability of alternative housing when considering borrowers for relief. According to HB-1-3555, “The goal should be a formal relief provision that will cure the delinquency as soon as possible without imposing an undue hardship on the borrower.”245 Should the borrower be granted forbearance, the servicer has the discretion to reduce or suspend the borrower’s monthly payments for up to twelve months. During forbearance, the servicer should regularly follow up with the borrower. Once the forbearance period ends, the borrower must agree to resume payments and enter a payment plan; however, there are options available for borrowers who need a loss mitigation option.246

Footnotes

  • 244 See U.S. Dep’t of Agriculture, Rural Development, SFH Guaranteed Loan Program Technical Handbook HB-1-3555, § 18.14, Special Relief Measures.

  • 245 See U.S. Dep’t of Agriculture, Rural Development, SFH Guaranteed Loan Program Technical Handbook HB-1-3555, § 18.14, Special Relief Measures.

  • 246 See U.S. Dep’t of Agriculture, Rural Development, SFH Guaranteed Loan Program Technical Handbook HB-1-3555, § 18.14, Special Relief Measures.