How does a forbearance work?

<span data-sheets-value="{"1":2,"2":"For forbearances to work, your lender must agree to pause your payments for a specified period of time (usually a year), so that you can recover from your financial hardship. Payments will then resume after the specified period of time."}" data-sheets-userformat="{"2":15105,"3":{"1":0},"11":4,"12":0,"14":{"1":2,"2":0},"15":"Montserrat","16":8}">For forbearances to work, your lender must agree to pause your payments for a specified period of time (usually a year), so that you can recover from your financial hardship. Payments will then resume after the specified period of time.

What happens after a forbearance agreement concludes?

<span data-sheets-value="{"1":2,"2":"Your payments resume after your forbearance agreement expires. You would also need to pay all the payments you missed (you can either defer these payments, modify your loan structure, or work out an alternative solution with your lender)."}" data-sheets-userformat="{"2":15105,"3":{"1":0},"11":4,"12":0,"14":{"1":2,"2":0},"15":"Montserrat","16":8}">Your payments resume after your forbearance agreement expires. You would also need to pay all the payments you missed (you can either defer these payments, modify your loan structure, or work out an alternative solution with your lender).

What is a forbearance agreement?

<span data-sheets-value="{"1":2,"2":"A forbearance agreement is a legally binding document between a lender and a borrower, which states that the lender has agreed to halt payments from the borrower, and will not foreclose on their asset(s), for a specified period of time (which is a year, in most cases). This type of agreement is usually made when a borrower is going through financial hardship."}" data-sheets-userformat="{"2":15105,"3":{"1":0},"11":4,"12":0,"14":{"1":2,"2":0},"15":"Montserrat","16":8}">A forbearance agreement is a legally binding document between a lender and a borrower, which states that the lender has agreed to halt payments from the borrower, and will not foreclose on their asset(s), for a specified period of time (which is a year, in most cases). This type of agreement is usually made when a borrower is going through financial hardship.

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Forbearance Agreement

This forbearance agreement, created on [Created.Date], is entered into by and between [Sender.Company], the Lender, and [Client.Name], the Borrower. WHEREAS, the Borrower has previously entered into a loan agreement with the Lender, with a principal amount of [Loan.Principle] and an annual interest rate of Loan. APR.WHEREAS the Borrower has failed to adhere to the agreed schedule for repaying the said loan, and as a result, has defaulted on the loan agreement’s terms,WHEREAS, the Lender has agreed not to demand immediate payment of the total loan balance in accordance with the existing loan agreement and has instead opted to grant the Borrower an extended opportunity to bring the loan’s balance current,THEREFORE, The Borrower and Lender agree to the following terms of this forbearance agreement:

1. Forbearance

The Lender has agreed to extend the due date of the past due amount on the associated loan agreement by [Extension.Days] days. The Lender agrees to refrain from taking any action designed to demand or collect the loan’s balance prior to [Forbearance.ExpirationDate].

2. Absence of Waiver

This forbearance agreement shall not constitute a waiver of any right or term contained in the original loan agreement documents. The Lender shall continue to enjoy the full legal protections and benefits outlined in the original loan agreement.

3. Authority

The parties signing this forbearance agreement hereby warrant that they are authorized to enter into agreements on behalf of the parties involved in the associated loan agreement.

Acceptance

By signing below, the Lender and Borrower agree to the terms of this forbearance agreement as an addendum to the existing loan agreement.

[Sender.Company]

Signature

MM/DD/YYYY

[Sender.FirstName][Sender.LastName]

[Client.Company]

Signature

MM/DD/YYYY

[Client.FirstName][Client.LastName]

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Forbearance Agreement FAQ

For forbearances to work, your lender must agree to pause your payments for a specified period of time (usually a year), so that you can recover from your financial hardship. Payments will then resume after the specified period of time.

Your payments resume after your forbearance agreement expires. You would also need to pay all the payments you missed (you can either defer these payments, modify your loan structure, or work out an alternative solution with your lender).

A forbearance agreement is a legally binding document between a lender and a borrower, which states that the lender has agreed to halt payments from the borrower, and will not foreclose on their asset(s), for a specified period of time (which is a year, in most cases). This type of agreement is usually made when a borrower is going through financial hardship.