Looking for “deferral”? See “P” for “What is a payment deferral?”
What is forbearance?
Forbearance is an agreement between a servicer, such as Mr. Cooper, and a borrower to temporarily pause mortgage payments for a set period of time. It is not a waived payment or payment forgiveness, and all payments will need to be repaid at the end of the forbearance period (if that sounds out-of-the-question, don’t panic; there are several ways to do this, and Mr. Cooper is here to help you find a solution that works for you).
During the forbearance plan period, late fees will not be assessed and negative credit reporting will be suppressed.
Eligibility and terms for forbearance plans vary based on guidelines set by the owner of the loan. To learn more about the forbearance programs available for Mr. Cooper homeowners who are affected by COVID-19, click here.
What is a loan modification?
A loan modification changes the terms of your loan. This might be necessary if your circumstances change and you are unable to keep up with the agreed payments.
If you’re facing long-term hardship, Mr. Cooper may be able to modify your loan so it has more manageable terms. However, borrowers eligible for a loan modification must meet certain criteria and abide by the terms and conditions outlined by the investor of their loan.
While refinancing means replacing your existing loan with a new one, a loan modification keeps your existing loan and changes its terms. If you qualify for a loan modification, we’ll look for a way to reduce your monthly payments.
There are several ways to do this. We may be able to lower your interest rate or maybe extend the loan’s term length so that each month’s payment is a little lower.
What is a payment deferral?
A payment deferral allows a lender or servicer to push a set number of paused or missed monthly mortgage payments to the end of the loan. The deferred payments can typically be paid back by making one lump sum payment when the loan matures or is otherwise paid off, or by extending the mortgage term.
There are a few different types of payment deferrals, which are determined by the guidelines set by the owner of the loan. One type of deferral pushes the full amount of the paused or missed monthly payments (principal, interest, taxes and insurance) to the end of the loan. Another type of deferral pushes only the principal and interest portion of the paused or missed payments to the end of the loan. In the second case, if the loan is escrowed, any missed tax and insurance payments are not deferred but arrangements can be made to pay them back over a specified period of time.