Forbearance: In a forbearance agreement, the lender delays their rights to foreclose if the borrower catches up the delinquent payments within a defined period of time. This period and the payment plan depend on the details of the agreement that are accepted by both parties.
Forbearance is an appropriate solution for temporary financial problems. If the problem is more long term, such as negative equity or severe financial hardship, then a long-term solution like a loan modification, which may include an interest rate or principal balance reduction, is more appropriate.
Temporary modifications: These are designed to help owners during a period of hardship that has caused substantial financial distress. A temporary modification helps during the transition period during and after a hardship.
Permanent Modification: These are designed to help a homeowner who suffered a hardship and needs permanent assistance in order to be able to afford their monthly mortgage payment. These are the most popular solutions that our clients seek and are achieved most often. This solution could include an interest rate reduction, principal reduction, lower monthly payment, extending the loan term, and/or several other forms of help.
Reinstatement: A reinstatement happens when a borrower reaches an agreement with the lender to repay the delinquent balance and the loan reports current again. This means that foreclosure proceedings continue and the lender no longer accepts any funds except for the total amount that you owe.
If you pay the total outstanding debt, then you have reinstated your loan, which means that you avoid the foreclosure. Reinstatement also occurs after a period of forbearance, a payment plan to cover delinquency balance, or a trial loan modification.