What is a Forbearance Agreement Review?
A forbearance agreement is an arrangement in which a lender allows a borrower to reduce or pause their loan payments because they’re going through financial struggles.
This contract is legally binding and must specify how the arrangement will work, such as for how long the forbearance is meant to last.
Read the rest of this article to explore what key terms to include in a forbearance agreement, how to review it, and how a qualified lawyer can assist you with the process to ensure agreement clarity and balance.
What Key Terms Should You Review in a Forbearance Agreement?
A forbearance agreement usually includes the following terms that you should closely review:
- Duration. Check that the forbearance period length is stated clearly.
- Acknowledgement. Assess if the debtor acknowledges that they are in default and how much is owing on the debt.
- Fees and interest. Both fees and interest that must be paid by the borrower should be clearly detailed to prevent payment disputes.
- Termination triggers. Check for a list of conditions that will end the forbearance period.
- Conditions. Look for borrower conditions and obligations, such as making payments on time.
- Lender’s scope. The agreement should specify the enforcement actions that the lender agrees not to pursue during the forbearance period, such as foreclosure or debt collection.
- Release of claims. The agreement should include a legal waiver from the borrower to surrender their right to take legal action against the lender regarding previous loan actions.
How Should You Review a Forbearance Agreement?
Now that you’ve looked at some important terms in your forbearance agreement, there are other tips to consider during your contract review so that it’s comprehensive.
Flag Vague Borrower Duties
Clarify the borrower’s financial obligations. If they’re unclear, this can create misunderstandings. Make sure that it’s made clear how the debtor can pay off the debt, such as if they are permitted to pay a lump sum or if they will pay the amount off in installments.
As a borrower, you should check that lump-sum payments are reasonable and affordable for you.
Calculate the Interest
Explain how interest works and is calculated, to provide clarity between parties. This is especially crucial if interest and any penalties accrue during the forbearance period.
Check Borrower Defaults
The forbearance agreement must contain specific triggers for termination, such as missed payments. Make sure these are clear so that the borrower has clarity about what happens should they violate the terms of the agreement.
Outline all Fees
There could be additional fees included in the agreement. For transparency between the lender and borrower, these must be outlined. An example is admin fees that are charged for processing the agreement. Omitting any costs from the agreement can result in hidden charges later that lead to disputes.
Get Everything in Writing
Never rely on verbal agreements. Whatever is agreed on over the phone or in person, such as repayment structures, must be included in the document before you sign it. This reduces your risk of future disputes and ensures accountability for both parties.
Do You Need a Lawyer for a Forbearance Agreement Review?
When reviewing a forbearance agreement, it’s recommended to hire a qualified lawyer who can assist you with the process. By conducting an in-depth review of all the agreement’s terms, a lawyer can help you in the following ways:
- They’ll verify exactly what the lender and borrower are agreeing to so that there’s no room for misinterpretation.
- They’ll check that the payment deadlines are fair and reasonable.
- They’ll review all acknowledgements to reduce your risk of disputes.
- They’ll scrutinize termination provisions. This involves checking for any events that could end the forbearance period earlier than expected and how this affects the lender’s enforcement rights.
- They’ll give you peace of mind by checking the agreement is clear regarding all costs, fees, and obligations.
- They’ll check the forbearance agreement against other loan documents. This enables them to spot any inconsistencies or missing information that could expose either party to unexpected liabilities.
- They’ll make suggested revisions to the forbearance agreement so that it’s clear and specific.
- They’ll unpack any legal jargon or complex wording to ensure you don’t agree to unfavorable terms.
Where to Find a Lawyer for a Forbearance Agreement Review
If you’d like to hire a lawyer to review the terms of your forbearance agreement, you don’t have to take lots of time to find one who’s reputable and has experience in reviewing these specific contracts.
On online legal platforms such as ContractsCounsel, you can conveniently find a lawyer to review your forbearance agreement. They’ll ensure that all its terms are clear and legally sound before you sign it.
ContractsCounsel is one of the largest online legal marketplaces where you can connect with a curated network of vetted lawyers. Instead of searching for lawyers, you’ll post your request on the platform and lawyers will reach out to you to review your agreement.
Here’s how the process works.
- Start by going to the ContractsCounsel marketplace, where it’s free to post your request for a legal review of your contract.
- Receive lawyer bids. Instead of searching for a lawyer, you’ll receive multiple bids from lawyers on the platform.
- Review the lawyers’ profiles. ContractsCounsel provides lawyer information that includes the lawyers’ credentials, client ratings for previous projects, years of experience, and field of expertise. This helps you to select the most appropriate lawyer for your review.
- Connect with a lawyer and hire them to review your forbearance agreement for a flat fee.
