Forbearance Contract Example

A forbearance agreement is a contract between a borrower and a lender, where the lender agrees to temporarily reduce or suspend the borrower`s payments on a loan for a specific period of time. The agreement is designed to provide relief to borrowers who are experiencing financial difficulties, such as job loss, medical emergencies, or natural disasters.

Here`s an example of what a forbearance agreement might look like:

FORBEARANCE AGREEMENT

THIS FORBEARANCE AGREEMENT (the “Agreement”) is made and entered into as of [DATE], by and between [BORROWER NAME] (the “Borrower”) and [LENDER NAME] (the “Lender”).

RECITALS

WHEREAS, Borrower currently owes Lender the sum of [AMOUNT] under a certain promissory note dated [DATE] (the “Note”);

WHEREAS, Borrower is experiencing financial difficulties and is unable to make the required payments on the Note;

WHEREAS, Lender desires to provide Borrower with temporary relief from the payment obligations under the Note, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, Borrower and Lender agree as follows:

1. Forbearance Period. Lender agrees to forbear from exercising any of its rights or remedies under the Note or any related loan documents for a period of [NUMBER] months, beginning on [DATE] and ending on [DATE], provided that Borrower complies with the terms of this Agreement.

2. Payments. During the forbearance period, Borrower shall make the following payments to Lender:

a. [AMOUNT] on [DATE]

b. [AMOUNT] on [DATE]

c. [AMOUNT] on [DATE]

3. Other Terms. Borrower shall comply with all other terms and conditions of the Note and any related loan documents, except as modified by this Agreement. Borrower shall also provide Lender with any additional financial information or documentation that Lender may reasonably request.

4. Default. If Borrower fails to comply with any of the terms of this Agreement, the forbearance period shall be terminated and Lender may exercise any and all rights and remedies available under the Note and any related loan documents.

5. Entire Agreement. This Agreement contains the entire understanding between the parties and supersedes all prior negotiations, understandings, and agreements between them.

6. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state of [STATE].

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

BORROWER:

[NAME]

LENDER:

[NAME]