What forbearance means when your seller wants to sell

KW Default Solutions

Last updated November 3, 2026

If a seller tells you "I'm in forbearance," this one is worth saving. It changes the numbers on the file. It also changes who you need to hear from before you price the home.

What you'll be able to do: explain forbearance in plain words and ask the seller five questions that matter. You'll also know what can happen when the plan ends.

Five questions to ask a seller in forbearance

Work through these in order. The seller can answer some of them. The rest come from the servicer, in writing.

Ask the seller:

1. "What does your forbearance plan say, and when does it end?"
2. "Who owns your loan, and who services it?"
3. "How much has been paused so far, and what else is still due?"
4. "What has the servicer said will happen when the plan ends?"
5. "What happens to the paused amounts if you sell?"

011. What does the seller's forbearance plan say, and when does it end?

Ask: "Do you have the plan in writing, and what is the end date?"

Check: The written plan from the servicer and the seller's latest monthly statement.

A servicer is the company that collects the mortgage payments and handles the loan. It may or may not own the loan.

The Consumer Financial Protection Bureau (CFPB) is a federal agency that oversees consumer finance. It says the servicer or lender lets the owner "temporarily pause mortgage payments or make smaller payments." The owner still owes the full amount. The difference gets paid back later.

Plans come in different shapes. Some pause payments completely. Others lower them. For Fannie Mae loans, the first offer can run up to six months. Extensions may be granted, but don't count on one.

Fannie Mae tells servicers to give the homeowner a copy of the plan. If the seller can't find it, ask them to request one.

Script (to the seller): "Can you send me a copy of your forbearance plan and your latest statement? I want to make sure we're working from the real dates and numbers."

022. Who owns the seller's loan, and who services it?

Ask: "Is the loan owned or backed by Fannie Mae, Freddie Mac, FHA, VA, USDA or a private lender?"

Check: Ask the servicer. Freddie Mac also has an online tool that shows whether it owns a loan.

This matters because the rules change by loan type. The Federal Housing Finance Agency (FHFA) oversees Fannie Mae and Freddie Mac. Those are two large companies that own or guarantee many U.S. mortgages.

FHFA says their programs are "solely for Enterprise loans." Loans insured by the Federal Housing Administration (FHA) have different options. FHA is part of the U.S. Department of Housing and Urban Development (HUD).

Loans backed by the Department of Veterans Affairs (VA) or the U.S. Department of Agriculture (USDA) have their own options too. For a loan with no federal backing, the CFPB says to check with the servicer. Ask about its repayment options and fees.

Script (to the seller): "Let's find out who owns your loan. The options after forbearance depend on that, so it's the first thing the servicer will look at."

033. How much has been paused so far, and what else is still due?

Ask: "How many payments were paused or reduced, and are taxes, insurance and HOA dues being paid?"

Check: Monthly statements and the escrow section of the latest statement. Then confirm with the servicer.

Forbearance doesn't erase or lower the debt. The CFPB says the owner has to repay any missed or reduced payments. It also says to ask the servicer how interest builds up during the pause.

Escrow is the account the servicer uses to pay property taxes and insurance. The CFPB says the servicer should keep paying those if the loan has escrow. It also suggests confirming that with the servicer. If there is no escrow, the owner pays them.

The CFPB also says the owner is responsible for HOA or condo fees during forbearance.

Script (to the seller): "Let's write down how many payments were paused. Let's also check that your taxes, insurance and HOA dues are current. That gives us a starting point before we ask for real numbers."

044. What has the servicer said will happen when the plan ends?

Ask: "Has the servicer offered a repayment plan, a deferral, a modification or something else?"

Check: Any letters from the servicer. For Fannie Mae and Freddie Mac loans, the CFPB says servicers reach out about 30 days before the plan ends.

The CFPB says to contact the servicer before forbearance ends to plan what comes next. For most government-backed loans, servicers can't require a lump sum. If the seller hears only "pay it all at once," they can ask about other options.

05What can happen when forbearance ends

This chart covers common outcomes. Names and terms vary by who owns the loan, and not every owner qualifies for each one.

Script (to the seller): "Have you had any letters about what happens after your forbearance ends? If not, let's call your servicer together and ask what options you've been reviewed for."

065. What happens to the paused amounts if the seller sells?

Ask: "If the home sells, how will the paused amounts show up in the payoff?"

Check: A written payoff statement from the servicer. The payoff is the full amount needed to clear the loan at closing.

The CFPB lists "What happens to my missed payments if I sell my home?" as a question to ask the servicer. Ask it early, before you price the home.

If the seller already has a payment deferral, the moved amount comes due at sale. FHFA says it comes due at maturity, sale, refinance or payoff. HUD says an FHA partial claim doesn't need repaying until, among other events, "the property is sold."

If the seller is still in an active plan, the paused amounts are still owed. How they appear in the payoff is a question for the servicer. Ask for it in writing.

Forbearance alone doesn't mean a short sale is needed. If the price covers the payoff, the seller may sell the usual way. If it won't cover the payoff, the seller may need a short sale. A short sale happens when a home sells for less than the mortgage payoff and the lender agrees to take less so the sale can close. The servicer decides whether to approve it.

Script (to the servicer, with the seller on the call): "The owner is thinking about selling. Can you send a written payoff statement that shows how the forbearance amounts are handled?"

Worked example: a seller in forbearance

This example is fictional. Its payoff figure is an assumption used to show the math, not a quote for a real loan.

Dana's loan is owned by Fannie Mae. Before forbearance, her principal balance was $240,000. Her monthly principal-and-interest payment was $1,800, and she paused six payments. Those payments total $10,800, but adding that full amount to the old principal would count the principal portion twice. For this example only, assume her servicer provides a $250,800 payoff quote for the planned closing date. That assumed quote includes all amounts due on this loan; it is not calculated by adding the missed payments to the old balance.

At a $300,000 sale price, subtracting the assumed $250,800 payoff leaves $49,200 before selling costs and other liens. For a real sale, use a current written payoff for the planned closing date. Confirm whether any deferred balance or partial claim needs a separate payoff, and count each amount only once.

If the sale price were $245,000 and the same assumed payoff applied, the gap would be $5,800 before selling costs and other liens. Dana would need a way to cover that gap, such as bringing funds to closing, or seek approval for a short sale. A short sale is not automatic, and approval does not by itself establish that any remaining debt is forgiven. See the CFPB guidance on principal and interest, payoff quotes and short sales and remaining debt. Correction, November 3: the earlier example added full paused payments to the old principal balance. This version uses an explicitly assumed payoff instead.

Naming traps

• Forbearance isn't forgiveness. Fannie Mae tells servicers to make that clear to owners. A seller who says "they forgave my payments" likely means the payments were paused.
• Forbearance and payment deferral aren't the same. Forbearance pauses payments for a time. A deferral moves past-due amounts to the end of the loan after the pause.
• "Partial claim" is FHA's term. It puts past-due amounts into a separate interest-free lien against the home. A lien is a legal claim tied to the property.
• "Principal forbearance" inside a loan modification is something else. In a Fannie Mae or Freddie Mac Flex Modification, part of the principal can be set aside. Ask the servicer what any forbearance line on a statement means.
• "In forbearance" and "just stopped paying" differ. The CFPB says missed payments without a forbearance agreement get reported to the credit bureaus.

Practice: what would you do?

Here are six fictional situations. Decide what you'd do, then check the answer.

1. A seller says, "I'm in forbearance, so I can't sell." What you'd do: Explain that forbearance is a payment agreement. Then ask the servicer how the paused amounts are handled at a sale.
2. The seller doesn't know who owns the loan. What you'd do: Have the seller ask the servicer. You can also check Freddie Mac's online loan lookup tool.
3. The servicer tells the seller to pay everything at once when the plan ends. What you'd do: Suggest the seller ask about other options. For most government-backed loans, a lump sum can't be required.
4. The seller has an FHA partial claim and wants to list. What you'd do: Ask the servicer for a written payoff. A partial claim comes due when the property is sold.
5. Your pricing shows the home is worth less than the rough payoff. What you'd do: Talk with the seller about a short sale, and ask the servicer what it needs to review one.
6. The seller's HOA dues are three months behind. What you'd do: Note it on the file and raise it with the seller. The owner is responsible for HOA dues during forbearance.

Next step

If you're working with a seller in forbearance and you get stuck, reach out. We're happy to help you think through the file.

Reach out to the KWDS team

Who we are

KW Default Solutions (KWDS) helps Keller Williams agents find and handle listings tied to default. That includes homeowners behind on the mortgage, short sales, bank-owned homes and homes owned by companies or investors. We also train agents to do this work. Most of our opportunities are for Keller Williams agents.

General U.S. real estate education, not legal or tax advice. Each servicer and loan owner sets its own terms, and state law varies. All examples are fictional. Point sellers to their servicer, a HUD-approved housing counselor and a local real estate attorney.

Sources:

• CFPB: What is mortgage forbearance?
• CFPB: Exit your forbearance carefully
• CFPB: Ready to get out of forbearance, but confused about what to do next?
• CFPB: Manage your money during forbearance
• CFPB: What is a short sale?
• FHFA: Loss mitigation
• HUD: FHA's loss mitigation program
• Fannie Mae: Forbearance (servicing page)
• My Home by Freddie Mac: Options to stay in your home