Forbearance agreement

Forbearance agreement

A forbearance agreement is a signed agreement between a creditor and a debtor. In it the creditor agrees not to foreclose on the debtor’s mortgage.

What is a forbearance agreement?

A forbearance agreement is a signed agreement between a creditor and a debtor. In it the creditor agrees not to foreclose on the debtor’s mortgage. The forbearance agreement usually specifies the period of time granted to the delinquent debtor to resume repayment.

When forbearance agreements come into play

Forbearance agreements usually come into play when a debtor suddenly becomes unable to continue repaying a mortgage. They can either reduce the rates or suspend payment entirely for any given period of time. In such an agreement the debtor agrees not to foreclose on the debtor while the debtor agrees to resume full payment at the end of the period specified in the agreement, including the missing amount and interest rates, among other things. The exact details depend on what is negotiated between creditor and debtor.


However, forbearance agreements are not supposed to serve as long term solution for delinquent debtors. They are instead intended to grant short term relief if the debtor experiences sudden financial problems (unexpected repair costs, health problems etc.). If the financial problems turn out to be more fundamental and long-lasting, the debtor should seek other remedies.


In some cases the creditor can extend the forbearance agreement if the debtor’s financial troubles still persist at the end of the initially agreed upon period.


In order to be granted forbearance the debtor has to contact the creditor and explain their satisfaction to the creditor’s satisfaction. While there are no general rules as to whom receives forbearance and who does not, it can be expected that debtors with a history of making payments on time will have a higher chance of approval.

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