9203.12: What is forbearance? (01/01/19)

© Freddie Mac Single-Family Seller Servicer Guide

A forbearance plan is a written agreement between the Servicer and the Borrower (or deceased Borrower's estate) that reflects the terms of the forbearance, including whether the Borrower may make either reduced or no monthly payments for a specific period of time. If the Servicer achieves quality right party contact and the Borrower meets the eligibility criteria for a forbearance plan in accordance with Section 9203.13, the Servicer must offer:

1. An initial forbearance term for a period of one to six months, and, if necessary
2. One or more forbearance term extensions of one to six months

The forbearance plan may not be extended beyond a date that would cause the Delinquency to exceed a cumulative total of 12 months of the Borrower's contractual monthly Mortgage payment, including taxes and insurance, if the Servicer is collecting Escrow for those expenses, without prior approval from Freddie Mac.

Prior to the expiration of the initial and any extension to the forbearance plan, the Servicer must evaluate the Borrower's eligibility for an extension of the initial forbearance plan based on quality right party contact. Each forbearance plan evaluation, including an evaluation for a forbearance plan extension, must be completed in accordance with all eligibility requirements described in this section and Sections 9203.13 through 9203.17. Additionally, there is no limit on the number of forbearance plans that an eligible Borrower can receive over the life of the Mortgage.

Exhibit 93, Evaluation Notices, includes forbearance agreements that a Servicer may use, but must amend, as necessary to comply with the requirements of this section, Sections 9203.13 through 9203.17 and applicable law.

At the end of the forbearance period, the Borrower must cure the Delinquency through one of the following options:

• Full reinstatement of the Mortgage
• Partial reinstatement followed by a repayment plan
• Payment of the Mortgage in full
• A repayment plan
• A loan modification or
• Pay off the Mortgage through a short sale or deed-in-lieu of foreclosure

A loan modification is a type of workout option that enables the Borrower to retain homeownership (see Section 9201.6). If the Borrower can no longer afford to retain the property, the Servicer must pursue a workout option to liquidate the Borrower's interest in the property (see Section 9201.6), such as a short sale, deed-in-lieu of foreclosure, a workout Mortgage assumption, or a simultaneous modification and assumption.

Refer to Chapters 9205 through 9210 for requirements on workout options.

Refer to Chapter 8404 for additional requirements for Borrowers and Mortgages secured by properties affected by a disaster.