Learn how to differentiate between loan modification and forbearance agreements to ensure the best option for your clients.
Oftentimes, borrowers encounter a temporary hardship that prevents them from making mortgage payments on a timely basis. When contacted by this borrower for assistance, a forbearance agreement may be the solution to their problem. This topic will provide insight to the person negotiating or drafting forbearance agreements on behalf of creditors as to what provisions should be included in forbearance agreements. This information is critical for creditors wishing to avoid loss of priority, statute of limitations issues and litigation, should the borrowers default after executing the forbearance agreement.
Distinguishing Forbearance Agreements From Loan Modifications
ï Loan Modifications Are Permanent; Forbearance Agreements Are Temporary
ï Forbearance Agreements as "Trial Modifications"
ï When Are Consents From Subordinate Lien Holders or Guarantors Required?
ï Clearing Title White Forbearance Agreement in Effect Prior to Entering Into a Loan Modification
Forbearance Agreements Can Be Entered Into Before or During Foreclosure Action Commenced
Dual Tracking Prohibition Against Entering Judgment If Borrower Is Complying With Forbearance Agreement
ï Ratification and Confirmation of Loan Documents
ï Acknowledging Total Amount of Debt Including Interest, Late Charges and Legal Fees and Costs
ï Acknowledging Debt and Expressing Intent to Pay
ï Estoppel Certificates
Providing Remedies for Subsequent Default
ï Notice Requirements
ï Proceeding Ex Parte
ï Cancelling "Forgiveness" and Proceeding With Foreclosure
Peter T. Roach, Esq. with Peter T. Roach & Associates, P.C.
CLE (Please check the Detailed Credit Information page for states that have already been approved) ,CPE ,Additional credit may be available upon request.