Mortgage Forbearance in New York: How It Works and What Happens When It Ends
If a job loss, illness or other hardship has made your mortgage payment impossible for now, mortgage forbearance can give you breathing room. It lets you pause or lower your payments for a short time while you get back on your feet.
But forbearance is not free money, and it does not erase what you owe. Here is how it works, what happens when it ends and how to protect yourself.
What is mortgage forbearance?
Mortgage forbearance is an agreement with your mortgage servicer to pause or reduce your monthly payments for a set period, often a few months at a time. During that period, your servicer generally will not start a foreclosure over the payments you skip under the agreement.
The key thing to understand: the payments you skip are not forgiven. You still owe them. You will have to make them up later in one of the ways described below.
Who can get forbearance?
Forbearance is usually meant for a temporary hardship, such as:
- Losing your job or having your hours cut
- A serious illness or injury
- The death of a spouse or family member who helped pay the mortgage
- A divorce or separation
- A natural disaster or major damage to your home
Each servicer and loan type has its own rules. Loans backed by Fannie Mae, Freddie Mac, FHA, VA and USDA all have forbearance programs, but the details differ. Your servicer is the company you send your payments to, and it decides whether you qualify.
How to ask for forbearance
- Call your servicer as soon as you know you will have trouble paying. It is easier to get help before you fall far behind.
- Explain your hardship and how long you expect it to last.
- Ask what you will owe when it ends and what repayment options are available. Do not agree until you understand this.
- Get the agreement in writing. Check the start date, the end date and any payment you must make during forbearance.
- Keep notes of every call, including the date and the name of the person you spoke with.
What happens when forbearance ends?
Before your forbearance ends, contact your servicer to choose how you will repay the skipped payments. Common options include:
1. Pay it all at once
Some homeowners can pay the full amount they skipped in one payment, called reinstatement. Most government-backed loans do not require this, so do not assume you have to pay it all at once. Ask about the other options.
2. A repayment plan
You pay your regular monthly payment plus an extra amount each month until you have caught up on the skipped payments. This works best if your income is back to normal.
3. Payment deferral
The skipped payments are moved to the end of your loan, so you repay them when you sell, refinance or pay off the mortgage. Your regular monthly payment stays the same.
4. Loan modification
If you cannot afford your old payment anymore, a loan modification may change the terms of your loan to make the monthly payment more affordable.
Common forbearance mistakes to avoid
- Assuming forbearance is automatic. Simply not paying is not forbearance. You need an agreement with your servicer.
- Not planning for the end date. Contact your servicer at least 30 days before the forbearance ends.
- Ignoring mail from your servicer. Open every letter and respond by the deadline.
- Paying someone to set it up for you. You can ask for forbearance yourself for free. Read our guide to foreclosure rescue scams in New York.
What if the hardship does not end?
Sometimes a temporary problem becomes permanent. If you will not be able to afford your home even after forbearance, it is better to plan early than to wait for a foreclosure. Options may include a short sale or a deed in lieu of foreclosure. If you are already behind, read our guide on what to do when you are behind on mortgage payments in New York.
Need help with forbearance? Get free help today
Abraxas Foundation is a New York nonprofit that helps homeowners understand their options and avoid foreclosure. We meet you at your home, our help is completely free, and we can refer you to free legal assistance and HUD-approved housing counselors.
Call (929) 346-5734 or tap the button below for a free, confidential review.
Helpful official resources: NY Courts CourtHelp: Foreclosure and NY DFS Foreclosure Consumer Bill of Rights.
This article is general information, not legal, tax or financial advice. Speak with a housing counselor or attorney about your situation.
