The forbearance agreement is a special type of agreement that deals largely with the process of mortgage in USA. This type of agreement exists between the borrower (homeowner) and lender and is made to delay or hold back the foreclosure. Here the lender allows the borrower to miss part of the mortgage payment or even decreases the payment for a certain period of time. This is generally followed by the a clause that is added to the forbearance agreement that describes the penalties to be met in case of failure to pay within a certain period of time by the borrower.
The main aim of the forbearance agreement is to give a certain amount of time for the borrower to recover from certain financial crisis while he keeps his home. The payment is scheduled according to the convenience of the both the borrower and the lender. The payment method is also mutually agreed to in the forbearance agreement.
In the United States, this is a popular method through which temporary financial problems are resolved. The forbearance agreement is applicable only for recoverable financial issues. The document, hence, requires to be constructed carefully with great care to the details as stipulated by both the lender and the borrower. This type of document can be made through the help of a professional expert to avoid any errors. There are a few important points to be kept in mind while constructing the document:
- The names of both the lender and borrower should be clearly mentioned at the beginning of this document. The property that has been mortgaged should be described in detail as well.
- The forbearance period should be mentioned immediately after. As soon as the period of forbearance is over, the required steps to be taken by the lender must also be described.
- The mode of payment as preferred by the borrower must be stated. This is agreed upon by both the parties.
- In case of failure to pay, the penalties and legal action that the lender will take should be highlighted in this document. The borrower requires paying back the delayed payment after the forbearance period is over.
- The lender, too, cannot lease the property to other potential leasers while this forbearance period(1) is being maintained. The borrower can take legal actions, as a result.
- The document must be formatted in a simple and accessible language and should be understood by both properties. This can be used for future references as well.