Nationwide Mortgage Licensing System (NMLS) 2025 – 400 Free Practice Questions to Pass the Exam

The term that refers to the lender's decision to intentionally delay action after a borrower defaults is forbearance. Forbearance is a temporary agreement between the borrower and the lender, where the lender agrees to refrain from enforcing foreclosure or other legal actions for a specific period. This option is typically exercised in situations where the borrower is experiencing financial difficulties but is expected to recover and return to making regular payments. It provides the borrower with time to get back on their feet without the immediate threat of losing their home.

This differs from other terms such as escalation, which typically refers to increasing the level of urgency or intensity in a process or situation. Acceleration, on the other hand, involves the lender demanding the entire remaining balance of the loan due immediately after default, rather than delaying action. Exculpatory clauses would refer to provisions that relieve one party from liability, which is not relevant to the lender's management of a default situation. Understanding forbearance is crucial for both lenders and borrowers to navigate financial hardships appropriately.