Texas Commercial Law Firm

Forbearance agreements are typically used when the borrower defaults as the result of what appears to be a short-term cash-flow problem or when the lender is willing to provide the borrower with a set period of time to refinance the defaulted loan with another lender. Forbearance agreements are structured so that the lender has the right to foreclose immediately in the event the borrower fails to meet the terms of the forbearance agreement within the specified time frame.

The following terms are commonly used in forbearance agreements:

A forbearance agreement is therefore used to provide the borrower one last chance to become current or pay off the loan without significant compromise of the lender’s position. If the loan has been accelerated, it remains in an accelerated state and if it becomes necessary to foreclose, the forbearance agreement allows the lender to avoid delays associated with having to provide another notice of default and intent to accelerate.