Mortgage Forbearance Agreement

See: Mortgage.

You’ve fallen behind on your mortgage. Your Irish dance troop hasn't gotten much work lately, and you just can't make your bills. Technically, you’re in default, which means the lender has the right to foreclose on your home.

However, a foreclosure isn't something either you or your lender really wants. For you, it means you'll have to find a new place to live (and who'd want to rent an apartment to an out-of-work Irish dancer, who will be loudly practicing all the time?). For the lender, they have to go through all the trouble and expense of foreclosing on the house and then selling it. Not to mention that they'd make more money from you paying off your mortgage than they would from selling the house (they don't earn any interest from the sale).

Time for a forbearance agreement. It's a deal you can strike when you're behind on your mortgage that halts the foreclosure process. The lender agrees not to exercise their right to launch a foreclose proceeding on the mortgage. Meanwhile, you as the homeowner set up a payment plan (or other similar arrangement) that enables you to get up-to-date with your payments.

It's like taking a time-out from the nasty legal proceedings, giving you a chance to figure out your finances (and maybe get a new profession).