[Code of Federal Regulations]
[Title 42, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR60.37]

[Page 329-330]
 
                         TITLE 42--PUBLIC HEALTH
 
    CHAPTER I--PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN 
                                SERVICES
 
PART 60--HEALTH EDUCATION ASSISTANCE LOAN PROGRAM--Table of Contents
 
                    Subpart D--The Lender and Holder
 
Sec. 60.37  Forbearance.

    (a) Forbearance means an extension of time for making loan payments 
or the acceptance of smaller payments than were previously scheduled to 
prevent a borrower from defaulting on his or her payment obligations. A 
lender or holder must notify each borrower of the right to request 
forbearance.
    (1) Except as provided in paragraph (a)(2) of this section, a lender 
or holder must grant forbearance whenever the borrower is temporarily 
unable to make scheduled payments on a HEAL loan and the borrower 
continues to repay the loan in an amount commensurate with his or her 
ability to repay the loan. Any circumstance which affects the borrower's 
ability to repay the loan must be fully documented.
    (2) If the lender or holder determines that the default of the 
borrower is inevitable and that forbearance will be ineffective in 
preventing default, the lender or holder may submit a claim to the 
Secretary rather than grant forbearance. If the Secretary is not in 
agreement with the determination of the lender or holder, the claim will 
be returned to the lender or holder as disapproved and forbearance must 
be granted.
    (b) A lender or holder must exercise forbearance in accordance with 
terms that are consistent with the 25- and 33-year limitations on the 
length of repayment (described in Sec. 60.11) if the lender or holder 
and borrower agree in

[[Page 330]]

writing to the new terms. Each forbearance period may not exceed 6 
months.
    (c) A lender or holder may also exercise forbearance for periods of 
up to 6 months in accordance with terms that are inconsistent with the 
minimum annual payment requirement if the lender or holder complies with 
the requirements listed in paragraphs (c) (1) through (4) of this 
section. Subsequent renewals of the forbearance must also be documented 
in accordance with the following requirements:
    (1) The lender or holder must reasonably believe that the borrower 
intends to repay the loan but is currently unable to make payments in 
accordance with the terms of the loan note. The lender or holder must 
state the basis for its belief in writing and maintain that statement in 
its loan file on that borrower.
    (2) Both the borrower and an authorized official of the lender or 
holder must sign a written agreement of forbearance.
    (3) If the agreement between the borrower and lender or holder 
provides for deferment of all payments, the lender or holder must 
contact the borrower at least every 3 months during the period of 
forbearance in order to remind the borrower of the outstanding 
obligation to repay.
    (4) The total period of forbearance (with or without interruption) 
granted by the lender or holder to any borrower must not exceed 2 years. 
However, when the borrower and the lender or holder believe that there 
are bona fide reasons why this period should be extended, the lender or 
holder may request a reasonable extension beyond the 2-year period from 
the Secretary. This request must document the reasons why the extension 
should be granted. The lender or holder may grant the extension for the 
approved time period if the Secretary approves the extension request.

(Approved by the Office of Management and Budget under control number 
915-0108)

[57 FR 28797, June 29, 1992]