Loan forbearance occurs when a lender approves skipping a specific number of scheduled payments on your loan due to the circumstances that caused the missed schedule payments from being made.
But what is forbearance?
The term forbearance refers to the temporary postponement of loan payments, typically for a mortgage or student loan. This usually happens when the lender grants the borrower momentary relief from paying off their debt in order to have an alternative to avoid foreclosure or default on the loan.
How does forbearance work?
Forbearance is an option for any loan. This procedure helps struggling borrowers and benefits the lender, who often loses money on foreclosures and defaults after payments are made. The terms of a forbearance agreement are negotiated between borrowers and lenders. The chances of getting an arrangement depend partly on the likelihood that the borrower will be able to resume monthly payments once the forbearance period is over.
The lender may approve a total reduction of the borrower’s payment or only a partial reduction, and this will depend on the borrower’s degree of need and the lender’s confidence that the borrower will catch up on payments.
How long does forbearance last?
Your initial forbearance plan will typically last 3 to 6 months. If you need more time to recover financially, you can request an extension. For most loans, your forbearance can be extended up to 12 months. Some loans may be eligible for up to 18 months of forbearance, depending on when your initial forbearance started.
Remember that FCI cannot approve your loan forbearance, only your lender can approve a loan forbearance as FCI is the loan servicer for your Lender and FCI works on behalf of them. Often the payments are not fully forgiven, but rather deferred to the back end of the loan in order to ensure that your loan remains current.
If you have further questions about loan forbearance or would like to discuss your individual situation, please feel free to contact FCI Customer Service at (800) 931-2424 x651, or email customerservice@myfci.com.
