what is a fobearance Agreement

[farawayangel]

I would like to know what forbearance Agreement is?
And why would I sign one before they decide on my modification?

Farawayangel

[The Professor]

A good question. First let me give you the horn book definition. "An agreement that a lending institution will delay exercising its right to foreclose on a loan as long as the borrower performs certain agreed upon term and conditions."

Now, for the underlying reason a lender offers this and wants you to agree to it. Lender's play a "what if" game. Here the question they are asking themselves is "what if you reject the modification they offer?" Well their answer would be that they would start foreclosure and you would probably initiate a bankruptcy proceeding to delay their foreclosure by taking advantage of the "automatic stay" provided by Bankruptcy Code section 362 which stops the lender from going forward with the foreclosure without permission from the bankruptcy judge.

Smart lenders know that pre-bankruptcy agreements that give the borrower time to negotiate a "out of court" resolution (e.g. modification) are viewed favorably by judges and provide evidence that the lender was a good guy before you filed your bankruptcy petition. This forebearance agreement will be utilized by the lender to help it obtain permission from the bankruptcy judge to proceed with its foreclosure.

I hope this helps you better understand the situation. Debtors' rights / creditors' remedies are the rules by which this *** and mouse game is played. If you wonder which role you play, guessing that you are the mouse would be correct.

Take care,

Daniel

[Dette]

I had a forebearance agreement with my lender CMC last year, basically you agree to make your regular scheduled payment and then add to your payment what you are behind spread over 12 months, they may require an initial large lump payment to start it and take it out of the foreclosure if it is in that stage.

[farawayangel]

But I am not behind in my payments?

farawayangel