- lender's decision not to exercise a legally enforceable right against a borrower in default, in exchange for a promise to make regular payments in the future. For example, a mortgage lender will agree not to initiate foreclosure proceedings against a mortgagor whose loan is in arrears.
- temporary relief granted a bank by a regulatory agency from compliance with minimum capital requirements or other banking regulations, extended to financial institutions in economically depressed areas. Banks given capital forbearance must file a plan to restore their capital base within a specified period.
a policy of restraint in taking legal action to remedy a default or other breach of contract, generally in the hope that the default will be cured, given additional time.
a policy of restraint in taking legal action to remedy a default or other breach of contract, generally in the hope that the default will be cured, given additional time.
Example: Because of a slowdown in the local economy, loan delinquencies increased dramatically at First Savings. Considering that most of the borrowers were long-term customers of the bank and had always honored their commitments, First Savings adopted a policy of forbearance in dealing with overdue payments. Every effort would be made to avoid foreclosure and give the borrowers time to bring the loans up to date.
