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A Loan Forbearance Agreement becomes necessary when a borrower faces difficulties meeting their original loan obligations and requires temporary relief. This document, governed by English and Welsh law, formally modifies the existing loan terms while preserving the lender's rights. It specifies the forbearance period, modified payment schedule, any additional conditions or security requirements, and ensures compliance with UK financial regulations and FCA requirements. The agreement is particularly relevant during economic downturns or when borrowers face temporary financial hardship.

1. Parties: Identification of lender and borrower with full legal names and addresses

2. Background: Details of original loan agreement and circumstances leading to forbearance

3. Definitions: Key terms used throughout the agreement including Forbearance Period, Original Loan Agreement, and Modified Payment Terms

4. Forbearance Terms: Specific modifications to payment terms, including duration and conditions of the forbearance

5. Acknowledgment of Debt: Borrower's confirmation of the outstanding amount and validity of the debt

6. Effect on Original Agreement: Clarification that other terms of original loan remain in force except as modified by this agreement

7. Representations and Warranties: Standard representations about capacity to enter agreement and accuracy of information

8. Governing Law and Jurisdiction: Confirmation that agreement is governed by English and Welsh law