[Code of Federal Regulations]

[Title 42, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 42CFR60.37]



[Page 336]

 

                         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 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]