Barrett Henry is a Broker Associate at REMAX Collective with 23+ years of Florida real estate experience helping homeowners navigate forbearance, loan modification, and foreclosure. He serves all 67 Florida counties, with direct service in Tampa Bay and referral connections statewide.
Getting a forbearance agreement from your mortgage servicer can feel like a huge relief when you're struggling to make payments. But signing the wrong agreement -- or signing one you don't fully understand -- can lead to a bigger crisis when the forbearance ends. Before you sign anything, take the time to review these key terms.
What Is a Mortgage Forbearance Agreement?
A forbearance agreement is a temporary arrangement between you and your mortgage servicer where the servicer agrees to temporarily pause or reduce your required payments in exchange for your agreement to repay the missed amounts on a specific schedule. Forbearance is governed by federal rules for government-backed loans (FHA, VA, Fannie Mae, Freddie Mac) and by contract for private loans.
Learn the basics in our Florida mortgage forbearance guide before reviewing the terms of a specific agreement.
Term 1: Repayment Method -- The Most Critical Clause
The single most important term in any forbearance agreement is how you will repay the missed amounts. There are four main repayment structures, and they are not equal:
- Lump sum: All missed payments due immediately when the forbearance ends. This is the most dangerous option. Most homeowners cannot produce 3 to 18 months of payments at once. If your agreement says "lump sum required," contact a HUD counselor immediately before signing.
- Repayment plan: Missed amounts spread over 3 to 12 months, added to your regular payment. Creates a temporarily higher payment but is manageable for most borrowers.
- Deferral: Missed amounts moved to the end of the loan, due only when the property is sold, refinanced, or the loan is paid off. No immediate repayment burden -- preferred by most homeowners.
- Modification: Loan modification that restructures the loan to include missed amounts and potentially lowers the regular payment. The most comprehensive option.
Federal program guidelines (FHA, Fannie Mae, Freddie Mac) generally prohibit lump sum repayment requirements. For private loans, lump sum is still common. Know what your loan type is and what the regulations say before accepting a lump sum term.
Term 2: Duration and Extension Rights
The forbearance agreement should clearly state:
- The start date
- The end date (or the number of months of forbearance)
- Whether you can request an extension if the hardship continues
- The process to request an extension (and the deadline to request it)
If the agreement is vague about when forbearance ends, get clarification in writing before signing. An unexpected end date that arrives faster than you anticipated leaves no time to arrange repayment or pursue a modification.
Term 3: What Happens When Forbearance Ends
The agreement should spell out exactly what options are available at the end of the forbearance period. Look for:
- A commitment that the servicer will evaluate you for available loss mitigation options
- A specific process for applying for a deferral or modification
- Whether the servicer can require you to resume payments on a specific date without a transition period
The CFPB's Regulation X (12 C.F.R. § 1024.41) requires servicers to evaluate borrowers for all available loss mitigation options when a complete application is received. Understand your rights to forbearance exit options before you get to that point.
Term 4: Credit Reporting During Forbearance
The agreement should state how your account will be reported to credit bureaus during the forbearance period. Key provisions to look for:
- If your account was current before forbearance began: the servicer should report your account as current during the approved forbearance.
- If your account was delinquent before forbearance began: the prior delinquency continues to be reported, but no new negative marks should be added during the forbearance period.
Verbal promises about credit reporting are not binding. Get the credit reporting terms in the written agreement itself.
Term 5: Interest, Fees, and Escrow During Forbearance
Review these specific financial terms:
- Interest accrual: Interest typically continues to accrue on the unpaid balance during forbearance. Your payoff amount will be higher when the forbearance ends than when it began.
- Late fees: The agreement should specify that late fees are waived during the approved forbearance period. Regulation X generally prohibits late fee assessment during an active loss mitigation plan.
- Escrow advances: Your servicer may continue to advance funds for property taxes and insurance out of escrow. These advances may increase your balance and affect your escrow account going forward.
Term 6: No Foreclosure During Forbearance
The agreement should confirm that the servicer will not initiate or advance foreclosure proceedings while you are in compliance with the forbearance agreement. This is legally required under CFPB's dual-tracking prohibition (12 C.F.R. § 1024.41(f)) for covered loans, but seeing it explicitly stated in the agreement provides additional protection.
If foreclosure proceedings were already underway before the forbearance, ask whether the servicer will request a stay in the court proceeding. Understand how Florida's judicial foreclosure process works so you know what stage the case is in.
Red Flags: What to Reject or Negotiate
Before signing, push back if the agreement contains:
- Waiver of legal rights: Language stating you waive any right to contest the mortgage balance, foreclosure validity, or servicer errors is a serious red flag. Do not waive rights.
- Lump sum requirement without alternative: Ask for deferral or repayment plan language instead.
- Vague or missing end date: The servicer can claim forbearance ended earlier than you understood.
- Admission of default in excess of what you owe: If the agreement states a balance figure that doesn't match your records, dispute it before signing. Send a Qualified Written Request to obtain your full payment history.
Get Help Before You Sign
A HUD-approved housing counselor can review a forbearance agreement at no cost to you. Find one through our guide to finding HUD housing counselors in Florida. If you believe the servicer is offering you terms that do not comply with federal law, file a complaint with the CFPB and consult a foreclosure defense attorney.
Explore your full range of options:
- Florida loan modification
- Selling before foreclosure
- Short sale
- All options to stop Florida foreclosure
Use our equity estimator and foreclosure checklist to understand your position before making any decisions.
Get free help today -- no cost, no obligation. Barrett Henry helps homeowners in all 67 Florida counties.
