Loan Forbearance Agreement
When a mortgagor has difficulty making payments, they risk foreclosure. However, most mortgagees would rather not go through a foreclosure, so the lender might agree to offer a Loan Forbearance Agreement. With this document, the mortgagee agrees to reduce or suspend mortgage payments for a period of time.
Why choose Swyft Forms?
Our exhaustive library of documents covers your personal, business, and real estate needs with all of your DIY legal forms.
Easy legal documents at your fingertips
Create professional documents for thousands of purposes.
Easily customized
Make unlimited documents and revisions.
Applicable to all 50 states
Our documents are vetted by lawyers and are applicable to all 50 states.
Frequently Asked Questions
A Loan Forbearance Agreement is a temporary solution when a borrower is unable to make payments on a loan (any loan, although mortgage loans are most common) for any reason. In effect, the lender agrees to postpone the monthly payment for a period of time, extending the original loan repayment period. This may or may not come with a change in the interest rate. At the end of the forbearance period, the borrower can resume making payments on the loan according to the original loan agreement.
On the other hand, a loan modification is permanent. It establishes new terms that modify the original loan agreement. A loan modification may help borrowers who have trouble meeting the terms of the original loan.
A repayment plan is a plan to pay back the loan over an extended period of time. Usually, the payment is fixed and can be used with a mortgage loan, a car loan, a student loan, or a negotiated credit card debt settlement. Borrowers who are unable to fulfill the obligations of a loan may attempt to renegotiate the terms and come up with a repayment plan, as long as the lender agrees.
It is no guarantee that a lender will extend a Loan Forbearance Agreement. To be worth its while, the lender might require the borrower to show income verification, current liabilities, and a reasonable explanation for needing a Loan Forbearance Agreement.
After the expiration of a Loan Forbearance Agreement, the terms of the original loan agreement will resume. Any amount skipped will be added to the loan principal, and the repayment schedule may be extended. One option would be to use a payment plan to make up the difference or extend the number of payments. If the borrower is still unable to resume payment on the loan, they can ask the lender for a loan modification.
Most of the time, lenders will report a Loan Forbearance Agreement to the credit bureaus. If the borrower has missed multiple payments before being granted the forbearance, this will be reflected in the credit score. If not, entering into a Loan Forbearance Agreement alone might not affect a borrower's credit score.
Create your free Loan Forbearance Agreement in minutes.
