During a suspended payment forbearance plan, what happens to the interest on the mortgage loan?

During a forbearance plan, interest is not paid but still accrues.  After the forbearance plan is complete, if the borrower is approved for another workout option, the type of workout option offered will determine how the interest is handled. For example, if the mortgage loan is brought current via a COVID-19 payment deferral, the missed principal and interest payments will not be capitalized into the new modified UPB.  Instead, the borrower’s missed payments will be placed into a non-interest bearing balance due at maturity of the mortgage loan or earlier payoff.

See below for more information on COVID-19:

• Fannie Mae’s COVID-19 page
• The Impact of COVID-19 on Servicing
• Fannie Mae Servicing Lender Letter LL 2020 02