Benefits

• Borrowers can usually defer partial or full mortgage payments for up to six months, a time frame that varies by bank and individual circumstances. For example, Bank of America will typically allow homeowners a 90-day forbearance period. After this time, borrowers will have to make accelerated payments, which include principal, interest, taxes and insurance, to get their mortgage up to date.
  
  

Eligibility

• Banks evaluate forbearance situations on a case-by-case basis. To qualify for a mortgage forbearance, homeowners typically need to have not paid three or more mortgage payments. Banks may choose to hold back mortgage payments if the borrower experiences temporary job loss or suffers from a short-term injury or disability that impacts his ability to generate income. If the homeowner experiences a natural disaster such as a flood and is waiting for an insurance payment to come through, she may also qualify for a forbearance period.
  
  

Process

• Banks want to ensure that the borrower's inability to pay is only temporary. Borrowers should visit or write to the financial institution that holds their mortgage note, detailing their financial situation and temporary hardship. If the bank accepts the hardship, it will issue new terms for a forbearance period and will halt the collection process while the borrower gets back on her financial feet.
  
  

Warning

• Mortgage forbearance does not reduce the principal or interest on a home loan, and borrowers are expected to become current on their mortgage after a time frame set by the bank. The Federal Trade Commission currently allows banks to charge upfront fees for the privilege of establishing a forbearance period. According to Steve McLinden of Bankrate, Florida and California prohibit lenders from charging the borrower for forbearance.
  
  

Alternatives

• Instead of pursuing mortgage forbearance, borrowers who have some income coming in may choose to pursue a loan modification in order to reduce their monthly payments or principle. Government programs such as Making Home Affordable allow homeowners to refinance their mortgage at much lower interest rates. The Principal Reduction Alternative allows homeowners to reduce the principal of their mortgage balance on a primary property.