A situation that takes place when a concession is made by a lending entity (a bank, financial institution) on the contractual terms of a loan in response to a customer’s financial difficulties. In general, forbearance refers to the act of refraining from the enforcement of an agreement involving a debt, right, or obligation that falls due. Specifically, it is a form of repayment relief leading to temporary postponement of debt payments. The temporary postponement or reduction in loan payments applies to principal or interest or both, while interest continues to accrue.

Forbearance, in the context of mortgages, is a special agreement between the lender and the borrower to delay a foreclosure. Forbearance, in this context, is also referred to as mortgage moratorium.