Forbearance

What does forbearance mean?

Forbearance is a short-term break for borrowers hit by job loss, illness or disaster. The servicer agrees to pause or shrink payments for a set period — but the missed amount is not erased; it is repaid afterward, often as a lump sum, a repayment plan, or added to the end of the loan. It protects your credit better than missed payments and buys time to recover, so ask early if you are struggling.

What happens when forbearance ends

Forbearance pauses or reduces payments; it does not forgive them. Before it ends, your servicer must work out how the missed amount is repaid. The common options:

• Reinstatement — pay everything you missed in one lump sum.
• Repayment plan — add a portion of the missed amount to regular payments for a set number of months.
• Payment deferral (partial claim) — move the missed payments to a non-interest balance due when the loan is paid off, sold or refinanced.
• Loan modification — permanently change the rate, term or balance to make the payment affordable.

Effects on credit and future loans

A forbearance agreed with your servicer is not supposed to be reported as late payments, but always get the agreement in writing and check your credit reports afterward. Interest generally keeps accruing during the pause.

Lenders look at forbearance history when you apply for a new mortgage or refinance; many want to see several on-time payments after it ends. Ask the servicer how each exit option affects your eligibility before you choose.