If mortgage borrowers are unable to meet their repayment terms, lenders may decide to cancel. To avoid enforced execution, the lender and borrower can enter into an agreement called „indulgence.“ Under this agreement, the lender delays its right to enforced execution if the borrower can obtain its payment plan on a specified date. This period and payment schedule depend on the details of the agreement agreed by both parties. Leniency can also occur for other types of loans, as may be the case for student loans. For example, the U.S. Congress recently passed the CARES Act to address the economic consequences of COVID-19. The package contained provisions relating to student credit leniency. Some national governments have also adopted their own leniency rules in the middle of the pandemic In some cases, the lender grants the borrower a complete moratorium on mortgage payments during the leniency period. In other periods, the borrower is required to pay interest but not to pay the principal amount.
In other cases, the borrower pays only a portion of the interest with the unpaid portion that results in negative amortization. Another leniency option is for the lender to temporarily lower the borrower`s interest rate. The leniency agreement signed in April has been renewed several times and covers approximately $22.8 million in coupon payments, both in the first line and second-line bonds. A lender that grants leniency waives its right to stolen interest on securities as part of its contract or contract with the borrower. This is done to help the borrower return to a strong financial situation, as well as a better position of the lender to achieve its security if the borrower does not. The borrower does not escape its obligations by accepting the agreed additional amount and/or the agreed terms. At the end of the agreed leniency period, the loan account returns to its original form. In many cases, at the end of the leniency period, the difference between the amount of leniency granted and the full refund (which has been omitted) is recalculated over the remaining term, and the customer`s new repayment is based on the current balance of credit, interest rate and duration. To obtain a mortgage, you must go to the lender, explain the situation and get permission. This option is more likely to be granted to borrowers who have made one-time payments in the past. The borrower must also prove the cause of the deferral of repayment, such as financial difficulties related to a serious illness or loss of a job. Borrowers can either opt for short-term relief by suspending their mortgage payment for a short period of time (known in the U.S.
as leniency), or request reduced payments over the term of the loan (known in the U.S. as a credit change).