Do you have a USDA loan and are wondering about forbearance or the repayment options that will be provided to you at the end of your mortgage forbearance? In this video, I discuss the USDA forbearance process in more detail and discuss the repayment options they mention in the CARES Act Forbearance Fact Sheet for Borrowers with FHA, VA, or USDA Loans and we also dive into the loss mitigation options outlined in Handbook-1-3555.
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What is a USDA Loan?
A USDA Home Loan from the USDA loan program, also known as the USDA Rural Development Guaranteed Housing Loan Program, is a mortgage loan offered to rural property owners by the United States Department of Agriculture
USDA Forbearance Repayment Options
RHS (Rural Housing Service Guaranteed Loan Mortgages) does not require a lump sum payment at the end of the forbearance. Lenders should work with the borrowers to determine if they can resume making regular payments and, if so, either offer an affordable repayment plan or term extension to defer any missed payments to the end of the loan. If the borrower is unable to resume making regular payments, the lender should evaluate the borrower for all available loss mitigation options outlined in Handbook-1-3555.
USDA LOSS MITIGATION OPTIONS
The servicer will make every possible effort to assist borrowers who are experiencing an involuntary inability to pay their mortgage and show cooperation to resolve default situations using appropriate loss mitigation tools. Loss mitigation options include informal repayment agreements, special forbearance agreements, or loan modifications. Special forbearance agreements and loan modifications should be used when information in the servicing file supports the borrower’s ability and willingness to pay. Voluntary liquidation methods such as pre-foreclosure sales and deed-in-lieu of foreclosure may be used to protect the Government’s interest once the servicer has examined other servicing options and determined the borrower cannot continue with the loan obligation. Traditional/standard loss mitigation options must be exhausted prior to use of Special Loan Servicing Options. Consideration must be given to all options prior to initiation of liquidation.
The servicer must attempt to obtain information on the borrower’s financial condition and make an informed determination of the borrower’s ability to repay the arrearage and continue making mortgage payments as scheduled. Details on consideration and processing the below actions are located in the Attachment 18-A, Loss Mitigation Guide:
• Servicing Early Delinquent Loans;
• Informal Repayment Agreement;
• Loss mitigation overview;
• General policies, procedures and minimum actions that constitute effective loss mitigation techniques;
• Special Forbearance;
• Traditional Loan Modification;
• Special Loan Servicing Options;
• Pre-Foreclosure Sale;
• Deed-in-Lieu of Foreclosure;
• Servicing plan, checklists; disposition cost benefit analysis; and
• Reporting – ESR and status of mortgage codes
CARES Act Forbearance Fact Sheet for Borrowers with FHA, VA, or USDA Loans – https://www.hud.gov/sites/dfiles/SFH/…
Loss Mitigation Handbook -1-3555 – https://www.youtube.com/redirect?event=video_description&redir_token=QecoY4xywLJUxazB4A6IcoJqAId8MTU5MDYyMDA0OEAxNTkwNTMzNjQ4&q=https%3A%2F%2Fwww.rd.usda.gov%2Fsites%2Fdefault%2Ffiles%2F3555-1chapter18.pdf&v=JHkCDC4Jw5k
If you have additional questions about USDA mortgage forbearance, please comment below or contact me directly.
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