Special Forbearance
Frequently Asked Questions

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A Special Forbearance (SFB) is a written repayment agreement between a mortgagee and mortgagor, which contains a plan to reinstate an asset that is minimum three mortgage payments due and unpaid.

Question 1: In reviewing a mortgagor for SFB, it was discovered that there were two homes on the lot. The mortgagor occupies one home and rents the other. Would the mortgagor qualify for consideration of a SFB?

Answer: In this case, the mortgagee would need to verify that the deed of trust reflects the current mortgage is on both homes with one FHA Case Number. If so, the mortgagee should treat this asset the same as a duplex where the mortgagor lives in one side and rents out the other side and continue their review for consideration of a SFB.

Question 2: What is the definition of SFB Agreement failure?

Answer: An SFB Agreement is considered failed when one of the following occur:

	The mortgagor abandons the property;
	The mortgagor advises the mortgagee that he/she will not follow through and fulfill the terms of the SFB Agreement; or,
	The mortgagor allows an installment to become due and unpaid for 60 consecutive days from the payment due date. See CFR 203.355(h)

Question 3:If the mortgagor has been performing under the SFB and then stops making payments, when does the 60-consecutive day failure begin?

Answer: The 60 consecutive days begin from the oldest unpaid SFB payment.

Question 4: If a mortgagor has executed their SFB Agreement, but then the SFB Agreement fails due to nonpayment, when must the mortgagee initiate foreclosure?

Answer: The mortgagee has 90 days from the last day of the 60th consecutive days of failure to initiate foreclosure.

Question 5: When a mortgagor is under a SFB Agreement and they are unable to make one of their scheduled payments, can a mortgagee give a verbal grace period to submit the payment?

Answer: Yes, the mortgagee may provide a verbal grace period for submission of that one payment. The mortgagee should also advise the mortgagor of the written schedule of submission of payments within the SFB Agreement and that if the mortgagor does not make the payment on the date that is verbally agreed to, the 60 consecutive days of failure will begin with the oldest unpaid payment. The mortgagee then should document their system.

Question 6: Mortgagor qualified and has been performing under a SFB Agreement, but then the mortgagor experienced a demotion at their place of employment and can no longer continue making the established SFB Agreement payments. Upon renegotiation, it is determined mortgagor qualifies for a SFB Type II, with cure of the delinquency resulting by utilizing a Partial Claim. May the mortgagee file incentive claim for the Partial Claim?

Answer: Yes. Mortgagee Letter 2002-17, Page 6, "Review and Re-negotiation," second paragraph states, "Plans may be re-negotiated if the mortgagor's financial circumstances change. However, re-negotiated plans may not exceed HUD's requirement that the loan be no more than 12 months delinquent." Within the Mortgagee Comment area, the mortgagee should fully document why a subsequent claim is being submitted for the same default.

Question 7: When does HUD expect a mortgagee to report an SFB Agreement via the SFDMS?

Answer: A mortgagee is to report an SFB Agreement via the SFDMS when the mortgagee has determined that the mortgagor has qualified for the SFB Agreement.

Question 8: Can the SFB Agreement be utilized while the mortgagor is waiting for the first monthly disability payment?

Answer: Yes, if the mortgagor has provided documented evidence of a "start date" for receipt of the monthly disability payments, the mortgagee may establish a SFB Agreement.

Question 9: If a mortgagor is set up on a SFB Agreement and only makes a partial payment, does that mean the plan has failed?

Answer: Yes. The SFB Agreement specifically states the amount of each monthly payment that must be paid, based upon the mortgagor's ability to pay. Any amount received that is less than the stated payment due, is considered a partial payment and the mortgagee may return that payment. The 60 consecutive days begin on the date the full payment was due.

Question 10: When a mortgagor is on a SFB Agreement (Special Provision Type 1) due to unemployment, what is the process that a mortgagee is supposed to conduct when the unemployed mortgagor becomes employed?

Answer: When a mortgagee enters into a SFB Agreement (Special Provision Type 1) with a mortgagor whose continued unemployment is the cause of the default, the mortgagee must document the mortgagor's employment status monthly and adjust the terms of the plan to reflect changes in income.