Forbearance Agreement

When a borrower falls behind on their payments, or is having trouble making their payments, it is important for them to talk to their lender. Communication with a lender is extremely important, because a lender is more likely to work with you to resolve your delinquency if you explain your situation and are honest with them, instead of avoiding contact. A lender may have options such as a forbearance agreement that can be extended to you if you are struggling with your loan payments.

If a borrower goes into default on their mortgage loan, student loan or other type of loan, they may be eligible for a forbearance agreement. A forbearance agreement is typically an arrangement to postpone, reduce, or suspend payments for a specified amount of time. Interest still accrues during the time of forbearance, and is added to the principal balance of the loan at the end of the time of forbearance.

Forbearance agreements were designed for people with temporary financial woes that are inhibiting their ability to make their payments. The idea is to give borrowers time to resolve the problems that are causing them to fall behind on their payments. For example, if you are temporarily out of work, a forbearance agreement will give you time to find another job so that you can resume making your loan payments.
Richard Croce - Rich@rrc-llc.com