Mortgage forbearance: What it means for homeowners

Q: Does mortgage forbearance hurt your credit score?

Generally not, if the account was current when the plan started and you follow its terms. Servicers typically report the account as current under the agreement rather than delinquent. That protection is not automatic, so confirm in writing how your servicer will report during forbearance, and pull your credit report afterward to verify it happened.

Q: How do you repay missed payments after forbearance ends?

There are usually four paths. A reinstatement pays everything at once. A repayment plan spreads the missed amount across several months of higher payments. A payment deferral moves the missed balance to the end of the loan, due at payoff or sale, with no payment increase. A loan modification permanently changes the rate or term. Lump sum is rarely required on federally backed loans.

Q: Can you sell your home while in forbearance?

Yes. You keep full ownership during forbearance, so you can list and sell the home like any other owner. The missed payments, accrued interest and full loan balance are settled from the sale proceeds at closing. If you owe more than the home is worth, you would need your servicer's approval for a short sale instead.

Q: Can you refinance a mortgage that was in forbearance?

Usually yes, after the plan ends. Fannie Mae and Freddie Mac allow refinancing once you have exited forbearance and made a set number of consecutive on-time payments under your repayment or modification arrangement, often three months. FHA and VA have their own seasoning rules. Timing varies by program, so confirm the exact waiting period before you apply.

Written by Samantha SheltonNMLS 1647301Updated October 2026

Homeowner calling his servicer to discuss mortgage forbearance options during a period of financial hardship

Mortgage forbearance is a temporary agreement in which your servicer reduces or suspends your monthly mortgage payment while you work through a financial hardship. It pauses the bill, not the debt: Fannie Mae and Freddie Mac closed April 2026 with 37,517 loans in forbearance, and every one of those borrowers still owed every missed dollar.

Forbearance is not forgiveness. Interest keeps accruing on your unpaid principal, and when the plan ends your servicer reviews you for a way to clear the arrears: reinstatement, a repayment plan, a payment deferral or a loan modification. Federal rules buy you room to get there, because your servicer generally cannot make the first foreclosure filing until your loan is more than 120 days delinquent.

Learn what mortgage forbearance means for homeowners, including how long a plan runs, the four ways to repay what you missed, and what to say when you call. If you’re still getting oriented, start with our Mortgage Basics guide.

Key takeaways:

A pause comes with a clock: On a loan Fannie Mae owns or guarantees, forbearance is granted in increments of no more than 3 months and cannot exceed a cumulative 12 months from the start of the first plan.
A lump sum is rarely the only exit: 5,729 borrowers moved from forbearance into a payment deferral in April 2026 alone, which shifts the missed amount to the end of the loan with no payment increase.
Call early, not late: Federal rules require your servicer to attempt live contact by the 36th day of delinquency and mail a written notice by the 45th day, and they bar most foreclosure filings until you are more than 120 days delinquent.

What is mortgage forbearance?

Mortgage forbearance is a written agreement between you and your mortgage servicer to reduce or suspend your monthly payments for a defined period, after which you either bring the account current or move into a permanent workout. That second half is the part homeowners miss.

Forbearance erases nothing. The missed payments become an arrearage you still owe, and interest keeps accruing on the outstanding principal the entire time. What it buys is time and cover: on a loan Fannie Mae owns or guarantees, the servicer is barred from accruing or collecting late charges while the plan is in force.

It is also not a deferment, a modification or a refinance, even though those words get used interchangeably in a stressful phone call. Forbearance is the pause; the others resolve what it leaves behind. For who holds your loan, see our guide to mortgage servicing and the CFPB’s explanation of forbearance.

How does mortgage forbearance work?

Forbearance is granted in short blocks, not open-ended stretches. On a loan Fannie Mae owns or guarantees, plan terms must be in increments of no greater than three months at a time and cannot exceed a cumulative term of 12 months measured from the start date of the initial plan. Forbearance offered up front in combination with a repayment plan cannot exceed 36 months.

Your payment is reduced or suspended, not waived: The obligation never changes, so unpaid amounts stack up as arrears while your note keeps accruing interest on the principal.
Late charges stop: Fannie Mae directs servicers not to accrue or collect late charges during a forbearance plan, and permits them to resume only from the date a borrower defaults on its terms.
Escrow still gets paid: Taxes and insurance come due anyway. The servicer usually advances them, and you owe that money back, spread over at least 12 months if the next analysis shows a shortage, or in as few as two monthly payments if it shows a deficiency, unless your workout folds it in. See our overview of payments, escrow and servicing explains.
Foreclosure protections stay in force: A servicer generally cannot make the first foreclosure notice or filing unless the loan is more than 120 days delinquent, and even a small servicer cannot start foreclosure while you are performing under an agreed loss mitigation option.

Underline that last one: performing on your plan is itself a shield. The federal loss mitigation rules for servicers also require written acknowledgment within 5 business days, and a complete application filed more than 37 days before a scheduled sale must be evaluated first.

What happens after forbearance ends?

You get four exits, and only one is a lump sum. Fannie Mae and Freddie Mac completed 17,201 foreclosure prevention actions in April 2026, including 7,484 permanent loan modifications, 5,729 payment deferrals, 2,344 forbearance plans and 1,476 repayment plans. Your mortgage servicer should reach out before the plan ends to evaluate you for one of them.

Option	How it works	Payment impact	Best when
Reinstatement	You pay the entire past-due amount at once and the loan is current again.	One large payment, then your normal payment resumes.	The hardship is over and the cash exists: a bonus, a settlement, a tax refund.
Repayment plan	You resume the regular payment plus an agreed extra amount until the arrears clear.	A higher payment for a set stretch, capped by Fannie Mae at 150% of your contractual payment.	Income is back and your budget can carry a temporarily larger payment.
Payment deferral	Past-due principal and interest move to a non-interest-bearing balance, due at maturity or earlier on sale, refinance or payoff.	None. Your payment returns to what it was.	Income recovered at the old level and a bigger payment is not realistic.
Loan modification	The note changes. Fannie Mae’s Flex Modification converts the loan to a fixed-rate, fully amortizing mortgage and capitalizes the arrears after a trial period.	A permanently different, usually lower, payment.	Income came back lower, or the arrears are too big for the other three.

Payment deferral has become the workhorse because it asks nothing of your monthly budget. On a Fannie Mae loan, a servicer may defer at least 2 and up to 6 months of past-due principal and interest, capped at 12 months cumulatively over the life of the loan, and the loan must be at least 2 but not more than 6 months delinquent at evaluation. That balance comes due when you sell the home, refinance or pay off.

Run it with numbers. Say your payment is $1,650 and your servicer approves a three-month forbearance covering April, May and June, leaving $4,950 past due.¹ Reinstatement means writing a $4,950 check. A 12-month repayment plan adds roughly $412 a month, taking you to about $2,062, inside the 150% ceiling of $2,475. A deferral moves the full $4,950 to the back of the loan and your payment returns to $1,650.

One clarification, because the terms blur: a deferral is not a mortgage recast, which you request in good times by making a large principal payment and re-amortizing to a lower payment.

Is mortgage forbearance right for you?

Forbearance fits a temporary interruption, not a permanent change in what you can afford. If income dropped for three months and is coming back, it is the right tool. If the drop is permanent, a modification is the honest answer, and forbearance only delays that conversation by up to 12 months.

It works for a defined, recoverable hardship: A job loss with a new role lined up, a medical leave with a return date, a temporary business downturn.
It buys documented protection: Performing on the plan blocks a foreclosure referral, and late charges stop accruing on Fannie Mae loans.
It does not reduce what you owe: Every deferred payment comes back, interest never stopped, and your escrow account still has a shortage to repay.
It can complicate near-term borrowing: Fannie Mae will not accept a loan for delivery where the borrower’s existing mortgage shows a 60-, 90-, 120- or 150-day delinquency reported in the 12 months before the credit report date.
It is not the only option: With equity and a permanent hardship, selling may beat a workout.

Not requesting forbearance is legitimate too. Making the payment keeps your file clean and every option open, including the ability to refinance out of a hardship on ordinary terms.

How forbearance rules differ by loan type

Every major program offers forbearance, but plan lengths and workout menus differ, so the first question on the call is which investor holds your note. Our explainer on servicing with Align Lending covers that relationship after closing.

Conventional loans backed by Fannie Mae or Freddie Mac

Terms come in increments of no greater than 3 months, up to a cumulative 12 months from the start of the initial plan. Fannie Mae caps repayment plans at 150% of your full contractual payment, and anything past 12 months needs its written approval. Across the two Enterprises, 9,395 new forbearance plans were initiated in April 2026 alone.

FHA loans

FHA’s home retention menu runs to six options, and a borrower may generally receive only one permanent option in any 24-month period unless a Presidentially Declared Major Disaster applies.² Beyond repayment plans and forbearance, HUD offers a standalone partial claim, which places past-due amounts in an interest-free subordinate lien; a standalone modification; a combination of the two; and a Payment Supplement, which uses a partial claim to clear the delinquency and temporarily cut the payment for three years.

VA loans

VA lists six foreclosure-avoidance options: special forbearance, a repayment plan, a traditional modification, a 30-year modification, a 40-year modification and the VA Partial Claim.³ The partial claim has VA work with your servicer to pay the missed payments and bring the loan current, and it requires a three-month trial payment plan first. VA has given servicers until November 28, 2026 to build partial claims into their systems, so ask whether it is live on your loan.

How to request mortgage forbearance

Call before you miss a payment, not after, and treat it as an application rather than a conversation. Your servicer must acknowledge a loss mitigation application in writing within 5 business days, so getting the request on the record starts a clock in your favor.

Say the words that trigger the process: “I am experiencing a financial hardship and I want to apply for loss mitigation, including a forbearance plan.” Vague phrasing gets a collections script; that sentence gets a loss mitigation file.
Have the file ready: Loan number, a dated written description of the hardship, proof of the income change, a list of monthly expenses and recent bank statements. Servicers must exercise reasonable diligence in chasing gaps, but a complete package moves faster.
Ask the five questions that set the terms: How long is the plan and in what increments? Do you charge interest on unpaid payments? What are my options when it ends? When will you contact me before it ends? Who owns my loan?
Get everything in writing before the first skipped payment: A verbal approval is not a plan. Confirm the exact start and end dates, what happens to your escrow account, and how the account will be reported to the credit bureaus each month.
Bring in a counselor if the servicer stalls: Free HUD-approved housing counseling is available nationwide, and HUD’s counselor line is (800) 569-4287. Counselors negotiate with servicers routinely and cost you nothing.

Document date, time, representative name and what was agreed. If your loan later transfers, that paper trail carries the plan across; our guide to mortgage servicing explains what a transfer changes.

What Michigan homeowners should know

Michigan is a foreclosure-by-advertisement state, meaning a lender can foreclose without ever filing a lawsuit, and the calendar moves faster than most homeowners expect.

Notice runs for 4 successive weeks: The foreclosure notice must be published at least once a week for four successive weeks in a newspaper in the county where the property sits, with a true copy posted conspicuously on the property within 15 days after the first publication.
The sale is a sheriff’s sale, not a court hearing: The property is sold at public sale to the highest bidder, between 9 a.m. and 4 p.m., at the county circuit court.
Redemption is 6 months on most owner-occupied homes: For residential property of not more than four units, redemption runs 6 months from the sale date when the amount claimed due at the date of the foreclosure notice is more than 66-2/3% of the original indebtedness. Owe less than that and it is 1 year; if the home is determined abandoned, 1 month or 30 days.
Michigan’s old modification-conference law is gone: The statute that once required a pre-foreclosure notice and a borrower-requested modification meeting, MCL 600.3205a through 600.3205d, was repealed effective June 30, 2013. What remains are the federal servicing rules, which is why the 120-day and 37-day thresholds matter here.

Redemption is a last resort, not a plan. A Michigan homeowner with equity is usually better off selling during forbearance than funding a redemption after a sheriff’s sale.

How Align sets up your payment

Align places your loan with a wholesale lender, and that lender or its servicer collects your payments after closing. Before then, Samantha builds your escrow on your real tax bill, not the seller's.

The year after a Michigan home sells, its taxable value resets to half of the assessor's market value, so the seller's tax bill is not your tax bill. She quotes your number on the high side on purpose.

Get a homebuying budget review

Sources: Michigan Treasury, transfer of ownership and uncapping.

FAQ: Mortgage forbearance

Here are answers to common questions about mortgage forbearance.

Does mortgage forbearance hurt your credit score?

It depends on how your servicer reports the account. There is no separate “forbearance” line on a credit report; what matters is whether each month is reported as current or delinquent. Get the reporting treatment written into your plan document, then pull your free reports afterward to verify it happened. Our guide to mortgage servicing explains who furnishes that data.

How do you repay missed payments after forbearance ends?

There are four paths. Reinstatement pays everything at once. A repayment plan spreads the arrears across higher payments, capped by Fannie Mae at 150% of your contractual payment. A payment deferral moves the missed amount to the end of the loan as a non-interest-bearing balance with no payment increase. A modification changes the note permanently, and a deferral is not a mortgage recast.

Can you sell your home while in forbearance?

Yes. You keep full ownership, so you can list and sell like any other owner. The missed payments, accrued interest and remaining balance are settled from the proceeds at closing, and any Fannie Mae payment deferral balance comes due on that sale. If you owe more than the home is worth, you would need servicer approval for a short sale instead.

Can you refinance a mortgage that was in forbearance?

Usually yes, once the plan has ended and you have re-established a payment record. Fannie Mae requires that no more than 45 days have elapsed since the last paid installment date on your existing mortgage as of the application date, and a recent 60-day-or-worse delinquency makes the new loan ineligible. FHA and VA set their own rules, so see how to refinance a mortgage in forbearance.

The bottom line on mortgage forbearance

Mortgage forbearance temporarily reduces or suspends your payment while a hardship runs its course, and it forgives nothing. On a loan Fannie Mae owns or guarantees, plans come in increments of no more than 3 months up to a cumulative 12 months, and interest keeps accruing on your principal the whole time. When it ends you have four exits: reinstatement, a repayment plan, a payment deferral or a modification. Federal rules generally block the first foreclosure filing until you are more than 120 days delinquent, which is why the call you make at day 20 is worth more than anything you can do at day 120. For wider context, see our Mortgage Basics guide.

If you’re ready to refinance out of a hardship, or you just want to know what your options look like on the other side of a forbearance, talk to Align Lending, we’ll shop your scenario across our lender network and show you the numbers side by side. Call 248-506-5727 or start online today.

Footnotes:

1. Example figures in this article are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. Your payment, arrearage, plan length and available workout options depend on your loan program, your investor, your servicer’s evaluation and your individual circumstances. Return to text.

2. Align Lending is not acting on behalf of or at the direction of FHA or HUD. FHA loss mitigation options and their eligibility requirements are set by HUD and are subject to change; confirm current terms with your servicer or HUD. Return to text.

3. Align Lending works with VA-approved lenders and is not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency. VA home retention options and their availability are set by VA and are subject to change. Return to text.

Sources: 37,517 loans in forbearance at the end of April 2026; 9,395 forbearance plans initiated during the month; 17,201 foreclosure prevention actions completed, comprising 7,484 permanent loan modifications, 5,729 payment deferrals, 2,344 forbearance plans and 1,476 repayment plans, FHFA Foreclosure Prevention and Refinance Report, April 2026. Forbearance plan terms in increments of no greater than three months, cumulative term of 12 months from the start date of the initial plan, the 36-month combined forbearance-and-repayment limit, and the prohibition on accruing or collecting late charges during a forbearance plan, Fannie Mae Servicing Guide D2-3.2-01. Repayment plan payments capped at 150% of the full monthly contractual payment, with written approval required beyond 12 months, Fannie Mae Servicing Guide D2-3.2-02. Payment deferral of at least 2 and up to 6 months of past-due principal and interest, the 12-month cumulative life-of-loan cap, the 2-to-6-month delinquency eligibility test, and treatment as a non-interest-bearing balance due at maturity or earlier upon sale, transfer, refinance or payoff, Fannie Mae Servicing Guide D2-3.2-04. Flex Modification conversion to a fixed-rate, fully amortizing loan with capitalized arrearages following a trial period, Fannie Mae Servicing Guide D2-3.2-06. Last paid installment no more than 45 days before the application date, and ineligibility for delivery where a 60-, 90-, 120- or 150-day delinquency was reported in the 12 months before the credit report date, Fannie Mae Selling Guide B3-5.3-03. Prohibition on the first foreclosure notice or filing before a loan is more than 120 days delinquent, 12 CFR § 1024.41(f)(1); application of that prohibition to small servicers and the bar on foreclosure while a borrower performs under a loss mitigation agreement, 12 CFR § 1024.41(j); written acknowledgment of a loss mitigation application within five business days, 12 CFR § 1024.41(b)(2)(i); reasonable diligence in completing an application, 12 CFR § 1024.41(b)(1); protection where a complete application is received more than 37 days before a foreclosure sale, 12 CFR § 1024.41(g). Live contact by the 36th day of delinquency and written early intervention notice by the 45th day, 12 CFR § 1024.39(a) and (b)(1). Escrow shortage repayment over at least a 12-month period and escrow deficiency repayment in two or more equal monthly payments, 12 CFR § 1024.17(f)(3) and (f)(4). FHA home retention options, the interest-free subordinate lien structure of the partial claim, the three-year Payment Supplement, and the limit of one permanent option in any 24-month period, U.S. Department of Housing and Urban Development, FHA Loss Mitigation. HUD housing counselor line (800) 569-4287, HUD. VA foreclosure-avoidance options, the three-month trial payment plan required for the VA Partial Claim, and the November 28, 2026 servicer implementation date, U.S. Department of Veterans Affairs. Michigan foreclosure notice published once a week for four successive weeks and posted on the premises within 15 days of first publication, MCL 600.3208. Public sale to the highest bidder between 9 a.m. and 4 p.m. at the place of holding the circuit court, MCL 600.3216. Six-month redemption period for residential property of not more than four units where more than 66-2/3% of the original indebtedness is claimed due at the date of the foreclosure notice, one-year period otherwise, and one-month or 30-day periods for abandoned property, MCL 600.3240(8) to (12). Repeal of MCL 600.3205a to 600.3205d effective June 30, 2013, 2012 PA 521.

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Forbearance eligibility, plan lengths, workout options, program rules and foreclosure timelines change and vary by investor, servicer, loan program and state; confirm your figures and your options with your mortgage servicer, a HUD-approved housing counselor, or a qualified professional. Figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending is an independent Michigan mortgage broker, NMLS #2041154.