A Forbearance Letter is a formal written request from a borrower to a lender, asking for temporary relief from loan payments due to financial hardship. The letter typically outlines the borrower’s current financial situation, the reasons for the hardship, and a proposed plan for how they intend to resume payments once the forbearance period ends. The forbearance letter is an important part of the process when requesting forbearance, as it serves as a documented explanation of the borrower’s need for temporary relief.

Key Elements of a Forbearance Letter:

1. Borrower’s Information:
   • Personal Details: The letter should include the borrower’s full name, address, phone number, email address, and account number or loan reference number to help the lender identify the account in question.
   • Date: The letter should be dated to reflect when the request is being made.
2. Introduction and Purpose:
   • Reason for Writing: The letter should clearly state that the purpose is to request forbearance on a specific loan or mortgage due to financial hardship. The borrower should briefly mention the type of loan (e.g., mortgage, student loan, personal loan) and the current status of the loan.
3. Explanation of Financial Hardship:
   • Details of Hardship: The borrower should provide a detailed explanation of the financial difficulties they are facing. This might include job loss, reduced income, medical emergencies, unexpected expenses, or other events that have impacted their ability to make payments.
   • Supporting Evidence: If applicable, the borrower should mention any documentation they can provide to support their claim, such as proof of income loss, medical bills, or layoff notices.
4. Request for Forbearance:
   • Specific Request: The letter should clearly state the borrower’s request for a forbearance period, including the desired length of time (e.g., three months, six months) and any specific terms they are seeking, such as reduced payments or a complete pause in payments.
   • Proposed Plan: The borrower may also outline how they plan to manage their finances during the forbearance period and how they intend to resume regular payments once the forbearance period ends.
5. Acknowledgment of Terms:
   • Understanding of Terms: The borrower should acknowledge that they understand that interest may continue to accrue during the forbearance period and that they will be responsible for repaying the deferred amounts after the forbearance ends.
   • Willingness to Cooperate: The letter should express the borrower’s willingness to work with the lender to find a mutually agreeable solution and their commitment to resuming payments as soon as possible.
6. Closing:
   • Appreciation: The borrower should thank the lender for considering the request and express appreciation for any assistance that can be provided.
   • Contact Information: The borrower should offer to provide any additional information the lender may need and include contact information for follow-up.
   • Signature: The letter should be signed by the borrower, and if applicable, any co-borrowers.

Sample Forbearance Letter:

Subject: Request for Forbearance on [Loan/Mortgage Account Number]

Dear [Loan Servicer’s Name],

I am writing to formally request a forbearance on my [type of loan, e.g., mortgage, student loan] due to a temporary financial hardship. I have been a [loan type, e.g., mortgage] customer with [lender’s name] since [date], and I have always strived to meet my payment obligations on time.

Unfortunately, due to [brief explanation of hardship, e.g., a recent job loss, medical emergency, or other financial challenges], I am currently unable to maintain my regular monthly payments. I am requesting a forbearance period of [specific length, e.g., three months] to provide me with the necessary time to stabilize my financial situation.

During this time, I understand that interest may continue to accrue on the outstanding balance. I am committed to resuming regular payments as soon as the forbearance period ends and would like to discuss a feasible repayment plan for the deferred payments.

I have enclosed [mention any supporting documents, e.g., a copy of my layoff notice, recent medical bills, etc.] to provide further context for my current financial situation.

I appreciate your understanding and consideration of my request. I am eager to work together to find a solution that allows me to fulfill my obligations once I am financially able to do so. Please feel free to contact me at [phone number] or [email address] if you require any additional information.

Thank you for your time and assistance.

Sincerely,

Importance of a Forbearance Letter:

• Communication: The forbearance letter serves as a formal communication to the lender, explaining the borrower’s situation and outlining the specific relief they are seeking. It helps establish a clear understanding between both parties.
• Documentation: By providing a written request, the borrower creates a record of their request for forbearance, which can be useful for both parties in tracking the status and terms of the agreement.
• Negotiation: The letter can serve as the starting point for negotiating the terms of the forbearance, allowing the lender to assess the borrower’s situation and propose a suitable plan.

In summary, a Forbearance Letter is a formal request from a borrower to a lender asking for temporary relief from loan payments due to financial hardship. It details the borrower’s situation, the specific terms of forbearance being requested, and a plan for resuming payments. The letter is a critical tool in communicating with the lender and seeking a temporary solution to financial difficulties.