What's a Forbearance Agreement? Among the many possible options available to a homeowner in foreclosure is a Forbearance Agreement. That's an agreement by a lender to stop the foreclosure proceeds in exchange for the borrower's promise to catch-up payments. The borrower will need to make larger than usual payments until any payments in arrearage are caught up. The monthly payments could be 1.5 to 2 times as large as the normal payments, depending on the borrowers financial ability.

Why would the lender make such an agreement? It would much rather have a performing loan, albeit a slow one, that end up owning the house. The lender's financial statements are adversely affected and it has the expense and hassle of home ownership.