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A forbearance is a tool that your loan holder can use when you (the borrower) experience difficulty in making loan payments. If approved, a forbearance can
There are four types of forbearance:
Although there are four types of forbearance, you will most likely be granted a discretionary forbearance or a mandatory forbearance. Both discretionary and mandatory forbearance types are options that you may request from the loan holder. In contrast, the loan holder applies automatically the other two types of forbearances (administrative and mandatory administrative) when specific situations occur.
A loan holder may grant a discretionary forbearance in instances where you are experiencing financial hardship that keeps you from repaying your debt. For example, a lender may grant you a discretionary forbearance if you are experiencing financial hardship due to:
Also, a lender may grant a discretionary forbearance in the form of reduced payments if you are experiencing financial difficulty. This allows you to continue the pattern of submitting payments on your account. Remember, it is always better to make smaller payments than no payments at all.
Although a lender is not required to grant a discretionary forbearance, a lender must grant a mandatory forbearance under certain circumstances. There are specific situations under which you may request a mandatory forbearance. A description of these situations follows:
Note: You must provide documentation to support your eligibility.