A forbearance agreement is used when a lender (''Lender'') agrees to withstand from enforcing the terms and conditions of a loan granted to a borrower (''Borrower''). The lender agrees to the suspension of payments from an individual or company for an obligated debt. If a borrower is unable to make monthly payments as agreed upon, the lender will allow the borrower to abstain from making the payments for a certain length of time.
The payments may be reduced, postponed or suspended in these contracts. The document will cover the date on which the borrower must resume payment, as well as how interest or fees will be incurred during the forbearance.
Terms of a forbearance agreement differ from lender to lender, however, all documents will typically include the conditions of payment, taxes, insurance, etc. These types of agreements are often temporary, and are commonly used in student loans and the real estate industry.