Loan Modification vs. Forbearance: Which One Is Right for You?

Loan Modification

A loan modification permanently restructures your mortgage. Your interest rate, term, or balance changes — and stays changed. This is the long-term solution for homeowners who need a sustainable, reduced payment.

You'll need to document a hardship and show income sufficient to make the modified payment.

Forbearance

Forbearance is a temporary pause or reduction in payments. California's AB 238 (2025) requires servicers to offer up to 12 months of forbearance for documented hardships. The missed payments are deferred — not forgiven.

Forbearance works best when your hardship is temporary and you expect income to stabilize.

Which One Should You Choose?

If your income has permanently changed — seek a modification. If you're experiencing a temporary setback — request forbearance first, then evaluate modification when the period ends.

NFDA can assess your specific situation and recommend the right path. Free consultation at www.thenfda.com.