If mortgage borrowers are unable to meet their repayment terms, lenders may decide to cancel. To avoid enforced execution, the lender and borrower can enter into an agreement called „indulgence.“ Under this agreement, the lender delays its right to enforced execution if the borrower can obtain its payment plan on a specified date. This period and payment schedule depend on the details of the agreement agreed by both parties. A mortgage guarantee is an agreement that has been agreed between you and your lender to provide you with temporary relief from the payment of your mortgage for a certain period of time, either by reducing or continuing payments. It is useful to consider with leniency a process covering a given period where a lender and a borrower have something to gain. Leniency often involves long-standing lending-borrower relationships for which the borrower has a reasonable chance of getting out of financial difficulties and being able to repay his debt in the not-so-distant future. Leniency doesn`t mean you`re excited for missed or reduced payments – you`re still owed the amount you missed later, usually when the leniency period ends. During the pandemic, borrowers with a government-guaranteed loan can apply for 180 days (six months) and an additional 180 days after that first six-month period. Many other mortgage lenders have proposed relief options, including longer leniency periods and payment plans for the resumption of regular and remedial payments from the borrower. You should continue your mortgage payments until you receive a written notification that the leniency agreement is in effect.

Otherwise, your lender may report payments not made to credit bureaus, which may have a negative impact on your credit score. The coronavirus outbreak triggered the indulgence of Fannie Mae and Freddie Mac. Between these two institutions, they guarantee more than two thirds of all mortgages and 95% of mortgage-backed securities. Service staff will contact you approximately 30 days before the expected end of your leniency plan to determine which assistance program is best for you on that date. Work with your department to determine the option you are entitled to. It is also important to use leniency agreements as a means of resolving priority issues. A lender will often request recognition and confirmation by the borrower of the pledge rights and security interests involved in the loan agreement. The option you choose depends on your financial situation and whether you can afford to make catch-up payments sooner rather than later. If you expect your finances to improve quickly and afford to pay, leniency may be the best choice. On the other hand, if you have no objection to extending your borrowing period to 12 months to compensate for payments, and you do not predict that your situation will improve in the foreseeable future, then a postponement may be the way forward.