A lender may use a Loan Forbearance Agreement to avoid foreclosing on a property. When a borrower can't meet loan requirements, they risk getting hit with a foreclosure notice and having the property taken away. However, the lender might agree to reduce the loan payments or even postpone them.
In that case, the two parties would enter into a Loan Forbearance Agreement. The agreement provides relief for the mortgagor and takes foreclosure temporarily off the table.
A Loan Forbearance Agreement is temporary. The deferral period is most commonly three to six months, though the mortgagee could always agree to extend that period. After that, the mortgagor will have to continue making payments on the loan. To be eligible for a Loan Forbearance Agreement, the mortgagor may have to prove they can resume making regular payments in due time.
Depending on your state, a Loan Forbearance Agreement may also be known as:
A mortgagor who's unable to meet mortgage payments may ask the mortgagee for a Loan Forbearance Agreement. For example, an individual on extended sick leave may need such assistance.
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A Loan Forbearance Agreement needs to be created with extreme attention to detail. You cannot afford to make any mistake that could jeopardize your home.
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Both the borrower and the lender must sign the document. Most states require a witness signature but not notarization.
Before creating the document, check the laws of the state to confirm the signing requirements.
After generating your Loan Forbearance Agreement on 360 Legal Forms, print a copy and get both the lender and the borrower to sign it. Supply each party with a copy of the Loan Forbearance Agreement for safe-keeping with the original loan agreement. Depending on the jurisdiction, it might have to be filed with a governing body, though this is usually the lender's responsibility.
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