Can You Get a Mortgage Payment Deferred?

A mortgage payment deferral offers homeowners a temporary arrangement to pause or reduce their monthly mortgage payments. This option provides short-term relief during periods of financial hardship, such as job loss, illness, or other unexpected events. The primary purpose of a deferral is to help borrowers stabilize their financial situation without risking foreclosure.

It acts as a bridge, allowing individuals to navigate difficult times while maintaining homeownership. The terms and conditions of a deferral vary based on loan type and lender policies. This flexibility accommodates diverse circumstances and provides a pathway back to regular mortgage payments once the hardship is resolved.

Understanding Mortgage Payment Deferral

Mortgage payment deferral moves missed payments to a later date, typically at the end of the loan term. This helps homeowners avoid immediate delinquency and aids financial recovery. Deferred amounts generally include principal and interest, and sometimes taxes and insurance.

One common method for handling deferred payments is to add them as a non-interest-bearing balloon payment due at the loan’s maturity, or when the property is sold or refinanced. This means the original loan term does not necessarily extend, but a larger sum becomes due at the end. Another approach extends the loan term by the number of months deferred, effectively pushing the maturity date further out.

A key distinction between deferral and forbearance lies in how missed payments are addressed. Forbearance temporarily allows a borrower to pause or reduce payments, but the missed amounts typically need to be repaid in a lump sum, through a repayment plan, or via a loan modification after the forbearance period ends. Deferral, on the other hand, specifically moves these missed payments to the end of the loan, often without requiring an immediate lump-sum repayment.

Interest accrual during a deferral period can vary. In many deferral programs, particularly those following a forbearance period, interest does not accrue on the deferred portion of the payments. However, interest typically continues to accrue on the outstanding principal balance of the loan during the deferral period, which can lead to a higher total amount owed over the life of the loan.

Fannie Mae’s payment deferral program allows eligible borrowers to defer up to 12 months of past-due principal and interest payments over the life of the loan. This offers breathing room for those who have resolved their hardship and can resume their regular monthly payments.

Eligibility and Required Documentation

To qualify for a mortgage payment deferral, lenders require borrowers to demonstrate financial hardship. This hardship can stem from events like job loss, reduced income, medical illness, or natural disaster. Lenders need assurance that the hardship is temporary and that the borrower can resume regular payments after the deferral.

A borrower’s payment history also plays a role in eligibility. While some programs, like certain Fannie Mae deferrals, may be available to those two to six months delinquent, others might require the borrower to be current or only recently delinquent. Lenders assess the borrower’s ability to continue making full monthly payments after the deferral.

Gathering documentation is essential before requesting a deferral. Lenders typically ask for a hardship letter, explaining the financial difficulty, signed and dated by the borrower.

Proof of income is required to assess the borrower’s capacity to resume payments. This may include recent pay stubs, tax returns, W-2s, or 1099s for self-employed individuals. Bank statements for the past two to three months are often requested to show financial activity and verify income and expenses.

Borrowers may also need to provide a list of household expenses. Requirements vary depending on the loan type, such as FHA, VA, Fannie Mae, or Freddie Mac loans, and the individual lender’s policies. Contact the loan servicer directly to confirm the documentation needed.

The Deferral Request Process

Initiating a mortgage payment deferral request begins with contacting the loan servicer directly. Borrowers can reach out through dedicated phone numbers for loss mitigation or online portals for hardship assistance. Communicate with the servicer as soon as financial difficulties arise, ideally before missing payments.

Once contact is made, the servicer will guide the borrower through their application submission process. This involves sending the hardship letter, income verification, and bank statements. Borrowers should ensure all documents are clear, legible, and complete to avoid processing delays.

The servicer will review the submitted application to determine eligibility. This review period can vary, but servicers often communicate timelines for their assessment. During this time, the borrower should expect follow-up questions or requests for additional information from the servicer.

Maintain open communication with the servicer throughout the review process. Responding promptly to requests for clarification or further documentation can expedite the decision.

Reviewing Your Deferral Agreement

Once a mortgage payment deferral is offered, carefully review the proposed agreement. The agreement will detail the repayment method for the deferred amounts. This could involve adding payments to the end of the loan term, creating a balloon payment due at maturity or sale, or establishing a separate non-interest-bearing lien. Understand how and when the deferred sum becomes due.

Borrowers should verify any changes to the overall loan balance, noting if interest accrued during the deferral period has been capitalized or added to the principal. The agreement should outline the revised payment schedule, if applicable, and confirm the date when regular payments are expected to resume. Any associated fees or interest charges for the deferred period should be stated.

Confirm the agreement’s impact on the borrower’s escrow account. Escrow accounts hold funds for property taxes and insurance, and a deferral might affect their replenishment schedule. Ensure the agreement states no negative credit reporting will occur for the deferred payments.

Receive the deferral agreement in writing before accepting any terms. Read the document and ask the servicer for clarification on any unclear provisions to prevent future misunderstandings. Only after understanding all aspects of the agreement should a borrower provide acceptance and signature.