188.8.131.52 RD Guaranteed Mortgage Loans
Rural Development initially announced that required servicers of Rural Development’s single-family guaranteed loans to suspend all foreclosure related actions for ninety days. This included the initiation of new foreclosures as well as foreclosures already in process.203 The foreclosure moratoria for the three September 2017 hurricanes were then extended until the dates indicated below:
- ● Hurricane Harvey: February 21, 2018;
- ● Hurricane Irma: March 9, 2018;
- ● Hurricane Maria: March 19, 2018.204
Servicers are encouraged, but not required, to consider a forbearance plan. To be eligible for forbearance the borrower’s home or place of employment must be directly affected by the disaster. The forbearance plan should take into account a wide range of factors including the borrower’s ability to find alternative housing, increase in living expenses as well as income going forward. Late fees will not be assessed while the borrower is on a repayment or forbearance plan, nor should a disaster-related plan be reported to the credit reporting agencies.
After the forbearance period ends, borrowers may be offered a modification. Only borrowers who were current (or less than thirty days past due) as of the date of the disaster are eligible, however.205 Other requirements include that the home be repaired and the borrower must occupy the home at the time of application. It is unclear if the agency will authorize a significant extension of the forbearance period to allow the borrower to complete the repairs necessary to qualify for a modification. The total modified mortgage payment must be less than or equal to the payment prior to modification. The borrower must also complete a three month trial period.
203 Foreclosure can be further suspended with prior approval from Rural Development. See U.S. Dep’t of Agriculture, Rural Development, Handbook HB-1-3555 SFH Guaranteed Loan Program Technical Handbook, ch. 18, available at https://www.rd.usda.gov.
204 Press Release, U.S. Dep’t of Agriculture, USDA Foreclosure Moratoriums Extended For Areas Impacted by Hurricanes Harvey, Irma and Maria (Oct. 24, 2017), available at https://www.rd.usda.gov.