Forebearance Agreement - An agreement between the lender or servicer to temporarily suspend payments, typically for financial hardships. After the forebearance period expires (typical for up to six months) you will be expected to resume your typical monthly payments plus additional payments until you repay the amount that would have been owed during the forebearance period.
Foreclosure - The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
Loan Modification - A permanent change in one or more of the terms of the mortgagor's loan allowing the loan to be restated in order to achieve an affordable monthly payment. Change in terms could include:
- Reduction in interest rate
- Conversion of interest rate from floating (ARM) to a fixed rate
- Principal reduction
- Term extension
- Reduction or elimination in fees and penalties
If a loan modification is not agreed upon by both parties, many times the next step would be initiating a short-sale.
Repayment Plan - An agreement between the lender and borrower to make specail arrangements to bring a loan current. It could include a Forebearance Agreement or an agreement to make installment payments.
Short Sale - A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. The short sale is subject to the lender's approval and submission of the required lender documents are time consuming and detailed. If there are any errors in the package it could cause significant delays in processing your request.