forbearance

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Forbearance

The temporary suspension of loan repayments due to demonstrated financial hardship on the part of the borrower. Interest continues to accrue during forbearance and thus may extend the repayment period or cause payments to increase once they re-commence. A borrower must apply to the lender to be considered for forbearance.
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forbearance

The act of restraining from exercising a right.

1. Typically encountered in leases and other contracts specifying that a forbearance by one party who fails to declare a default when entitled shall not entitle the other party to rely on future forbearances and will not constitute a waiver of any rights.

2. After a loan default, lenders will sometimes enter into formal forbearance agreements with borrowers, agreeing not to foreclose if the borrowers will agree to a new payment plan, pay all attorneys' fees associated with drafting the agreement, usually agree to a  higher interest rate and more collateral, and almost always agree to waive any and all claims against the lender.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.