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Forbearance Agreement Mortgage for Canada

Forbearance Agreement Mortgage Template for Canada

A Canadian Forbearance Agreement for mortgages is a legal document that modifies the terms of an existing mortgage agreement when a borrower is experiencing financial hardship. This agreement, governed by Canadian federal and provincial laws, establishes temporary or permanent modifications to the original mortgage terms, including payment schedules, interest arrangements, and default remedies. It provides a structured framework for both lender and borrower to avoid foreclosure while maintaining the security interest in the property, incorporating specific requirements under Canadian mortgage and banking regulations.

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What is a Forbearance Agreement Mortgage?

The Forbearance Agreement Mortgage is a critical legal instrument in Canadian lending practices, typically employed when borrowers face legitimate financial difficulties that prevent them from meeting their original mortgage obligations. This document becomes relevant when standard mortgage payments become unsustainable, but the lender assesses that the borrower's financial challenges are temporary or manageable through modified terms. The agreement must comply with Canadian federal legislation such as the Bank Act and Interest Act, as well as provincial property and mortgage laws. It includes detailed terms for the modified payment schedule, conditions for maintaining the forbearance arrangement, consequences of default, and preservation of the lender's rights. The document serves as a risk management tool for financial institutions while offering borrowers an alternative to foreclosure, incorporating specific Canadian regulatory requirements for mortgage modifications and consumer protection.

What sections should be included in a Forbearance Agreement Mortgage?

1. Parties: Identification of the Lender and Borrower(s), including full legal names and addresses

2. Background: Recitals describing the original mortgage, current default status, and parties' intention to enter into forbearance arrangement

3. Definitions: Key terms used throughout the agreement, including 'Forbearance Period', 'Original Mortgage', 'Modified Payment Terms'

4. Acknowledgment of Debt: Borrower's confirmation of the current outstanding mortgage amount and acknowledgment of default

5. Forbearance Terms: Specific terms of the forbearance including duration, modified payment schedule, and conditions

6. Borrower's Covenants: Ongoing obligations of the borrower during the forbearance period

7. Lender's Rights: Preservation of lender's rights under the original mortgage and conditions for terminating forbearance

8. Default Provisions: Consequences of failing to comply with the forbearance terms

9. Representations and Warranties: Current statements of fact by the borrower regarding financial condition and property status

10. General Provisions: Standard clauses including governing law, notices, and amendment procedures

What sections are optional to include in a Forbearance Agreement Mortgage?

1. Guarantor Provisions: Required when original mortgage includes guarantors who must acknowledge and agree to forbearance terms

2. Additional Security: Used when additional collateral or security is being provided as part of the forbearance arrangement

3. Insurance Requirements: Included when specific insurance obligations are being modified or added

4. Property Management: Required when specific property maintenance or management requirements are part of the forbearance terms

5. Financial Reporting: Used when regular financial updates from the borrower are required during forbearance

6. Sale Provisions: Included when the forbearance includes terms related to potential property sale

7. Third Party Consents: Required when other parties' consents (e.g., second mortgagee) are necessary for the forbearance

What schedules should be included in a Forbearance Agreement Mortgage?

1. Schedule A - Property Description: Legal description of the mortgaged property

2. Schedule B - Payment Schedule: Detailed modified payment terms including amounts and due dates

3. Schedule C - Current Mortgage Statement: Detailed statement showing current mortgage balance, arrears, and fees

4. Schedule D - Original Mortgage: Copy or summary of the original mortgage agreement

5. Appendix 1 - Financial Disclosure: Current financial information provided by the borrower

6. Appendix 2 - Compliance Requirements: Detailed list of ongoing compliance requirements during forbearance

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Ƶ

Document Type

Mortgage Agreement

Cost

Free to use
Relevant legal definitions








































Clauses



































Relevant Industries

Banking & Financial Services

Real Estate

Legal Services

Mortgage Lending

Property Management

Insurance

Financial Advisory

Debt Recovery & Collections

Relevant Teams

Legal

Credit Risk

Mortgage Administration

Collections & Recovery

Compliance

Real Estate Operations

Account Management

Risk Assessment

Property Management

Financial Advisory

Loan Operations

Relevant Roles

Mortgage Officer

Credit Risk Manager

Legal Counsel

Collections Manager

Loan Officer

Real Estate Manager

Credit Administrator

Compliance Officer

Property Manager

Financial Advisor

Debt Restructuring Specialist

Account Manager

Risk Assessment Officer

Banking Operations Manager

Mortgage Underwriter

Industries









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Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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