An alternative to legal action is to forbear the loan through a Forbearance Agreement (CROP Form 6). The Forbearance Agreement will allow the Farmer to operate in a normal manner as long as they are in compliance with the terms and conditions provided in the Forbearance Agreement. A Forbearance Agreement can be executed for up to three years. Payment schedules may be monthly or quarterly.
Reminder: The maximum interest rate when a loan is delinquent or in forbearance is 12%.
To forbear a CROP loan, the Lender must submit:
· Completed Forbearance Agreement (CROP Form 6);
· Current personal financial statement;
· Current statement of the farming operation's cash flows;
· Loan Disbursement Record (CROP Form 5);
· Written explanation for the need of the forbearance;
· Written explanation addressing what happened to the collateral;
· Written summary or explanation of the collateral securing the new Note; and
· Copy of the new Note.
Upon satisfactory review of the above documents, WHEDA will sign and return one copy of the Forbearance Agreement (CROP Form 6) to the Lender. Until the Lender receives a completely executed Agreement, signed by all three parties, the forbearance is not in place.
The Forbearance Agreement (CROP Form 6) and all supporting documentation must be received by WHEDA on or before June 30 of the year following the origination of the CROP loan.
The guarantee will terminate if the Forbearance Agreement expires and is not fully satisfied, and the Lender does not submit one of the following within 60 days:
· A new Forbearance Agreement (CROP Form 6) and all supporting documents; or
· Request for Guarantee Payment (CROP Form 7) and all supporting documents.
