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Special Forbearance Frequently Asked Questions

A Special Forbearance (SFB) - Unemployment Agreement is a written Agreement between a Lender and Borrower, which contains a plan to enable the Borrower time needed for them to acquire employment. 

Question 1: Are Special Forbearances only available to borrowers who are unemployed?

Answer: Yes. Special Forbearances are available only to borrowers that experience a verifiable loss of income due to unemployment. See ML 2013-32.

Question 2: Must the lender re-evaluate a borrower in the last month of their Special Forbearance to determine if a more permanent Loss Mitigation option may be used to cure the default? 

Answer: Yes. When a Special Forbearance is used, the Lender must subsequently evaluate the borrower for a more permanent loss mitigation option to cure the default. See ML 2013-32.

Question 3: When is an SFB Agreement considered failed?

Answer: An SFB Agreement is considered failed when one of the following occur:
 -   The borrower abandons the property;
 -   The borrower advises the Lender that he/she is no longer going to seek employment and/or will not honor the terms of the forebearance agreement.
 - The borrower allows forebearance payments to become 60 days past due and unpaid.
 - The borrower finds a job and the loan is reinstated.
 -   The delinquency exceeds 12 months worth of Principal, Interest, Taxes, and Insurance (PITI) installments; and the borrower is not eligible for a standard loan modificaiton or FHA-HAMP.
See ML 2002-17, 2011-23
Question 4: If a borrower has executed an SFB Agreement, but then the SFB Agreement fails due to nonpayment, when must the lender initiate foreclosure?
Answer: The lender has 90 days from the last day of the 60 consecutive days of failure to initiate foreclosure. See ML 2000-05.

Question 5: A borrower is set up on an SFB Agreement and only makes a partial payment; is this SFB Agreement considered failed?

Answer: Yes, after two installments become due and unpaid. The SFB Agreement specifically states the amount of each monthly payment that must be paid.  Any amount received that is less than the stated payment due is considered a partial payment and the lender may return that payment. An SFB is considered failed when the borrower allows two installments to become due and unpaid without any advisement to the lender of any problems that rendered the borrower unable to stay current under the terms of the forbearance. See Handbook 4330.1 Rev-5, 7-9B, and ML 2002-17.