Fannie Mae Form of Forbearance Agreement

As the COVID-19 pandemic continues to impact the abilities of homeowners to make mortgage payments, forbearance agreements have become a crucial option for individuals struggling to stay afloat. One of the most commonly utilized forms of forbearance agreements is the Fannie Mae Form of Forbearance Agreement.

What is a Forbearance Agreement?

A forbearance agreement is a contractual arrangement between a borrower and a lender that allows the borrower to temporarily suspend or reduce mortgage payments for a specified period. During the forbearance period, the borrower is not required to make regular payments, and the lender agrees to not initiate foreclosure proceedings, provided the borrower fulfills the terms of the agreement.

Fannie Mae Form of Forbearance Agreement

The Fannie Mae Form of Forbearance Agreement is a standardized document that outlines the terms and conditions of an arrangement between a borrower and their lender. This form is the most commonly used form of forbearance agreement within the mortgage industry and is recognized by the majority of lenders and servicers.

The Fannie Mae Form of Forbearance Agreement includes provisions for an initial forbearance period of up to six months, with the possibility of an extension for an additional six months if needed. During the forbearance period, the borrower is not required to make regular payments and will not incur late fees or penalties. However, interest will continue to accrue on the outstanding balance, and the borrower will be responsible for repaying the deferred payments at the end of the forbearance period.

Eligibility

To be eligible for a Fannie Mae Form of Forbearance Agreement, several criteria must be met. The borrower must be able to provide documentation demonstrating hardship, such as a job loss, reduction in income, or medical expenses related to COVID-19. Additionally, the borrower must have a mortgage that is owned by Fannie Mae or serviced by a lender who participates in Fannie Mae`s Mortgage Assistance Program.

Conclusion

The Fannie Mae Form of Forbearance Agreement is a helpful tool for borrowers who are struggling to make their mortgage payments due to the ongoing impact of COVID-19. By understanding the eligibility requirements and terms of the agreement, borrowers can make informed decisions about their financial future and avoid foreclosure. As always, it is essential to consult with a qualified financial advisor or housing counselor before making any decisions regarding forbearance or other mortgage relief options.

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