What is a forbearance agreement?

A forbearance agreement is a written contract in which a mortgage servicer allows a borrower to pause or reduce monthly payments for a specified timeframe, usually when the borrower faces temporary financial hardship. The agreement does not forgive the missed payments, erase them, or alter the underlying loan structure. Instead, the servicer agrees to suspend collection efforts and foreclosure proceedings while the borrower is in forbearance.

Forbearance agreements differ fundamentally from loan modifications. A modification changes permanent loan terms (such as interest rate, principal balance, or loan duration), whereas forbearance only delays payment obligations temporarily. Once forbearance ends, the borrower must typically resume full payments, often with a repayment plan that spreads the paused amounts over several months or a balloon payment added to the loan balance.

These agreements are common during periods of job loss, medical emergencies, or other documented income disruptions. The servicer documents forbearance terms in writing, specifying the payment reduction amount, the pause period, and what happens when forbearance expires. Many borrowers use forbearance as a bridge to financial recovery or to buy time while exploring loan modification or loss mitigation options with their servicer or attorney.

Forbearance is not automatic and requires the borrower to request it and provide evidence of hardship to the servicer.