Mortgage Forbearance vs. Loan Modification: What's the Difference
Forbearance and loan modification are both hardship options for homeowners struggling to make mortgage payments, but they solve different problems and lead to very different outcomes — confusing the two can lead to unpleasant surprises, particularly around what happens to missed payments once a hardship period ends. What forbearance actually does Forbearance is a temporary arrangement where the loan servicer agrees to reduce or pause mortgage payments for a set period, typically due to a temporary hardship (job loss, medical emergency, natural disaster). It doesn't erase the missed payments — it postpones them, and the borrower generally still owes that amount once the forbearance period ends. How missed forbearance payments are typically resolved Once forbearance ends, options for handling the paused amount generally include a repayment plan (adding a portion of the missed amount to future payments over time), a lump-sum repayment, extending the loan term to spread out the...