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SFH Guaranteed Servicing
April 3, 2023
Servicing Relief for Borrower's Impacted by Presidentially Declared Disasters
The USDA remains committed to assisting borrowers impacted by disasters and understands that some may experience unique and unparalleled circumstances in their hardships.
This announcement outlines relief measures that holders and/or loan servicers of USDA Single Family Housing Guaranteed Loan Program (SFHGLP) mortgages should implement to assist USDA Rural Development (RD) borrowers affected by any Presidentially Declared Disaster or PDD. Homeowners impacted by these events may be eligible for temporary relief. Due to the magnitude and aftermath of a disaster, loan servicers must inspect properties that secure impacted SFHGLP loans to assess the extent of damage as well as the occupancy status, particularly if contact has not yet been made with the borrower.
Loan servicers seeking to assist SFHGLP borrowers may pursue any of the relief options referenced in the following USDA guidance.
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IMMEDIATE MORATORIUM/FORECLOSURE SUSPENSION: An immediate moratorium may be put in place for borrowers whose properties or place of employment is directly impacted by a disaster. The servicer must suspend all foreclosure actions for borrowers whose property has been affected by a PDD. This applies to both the initiation of new foreclosures, as well as foreclosures already in process. This moratorium shall expire 90 days after the date the President declares the federal disaster expired unless extended by the USDA.
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FORBEARANCE: USDA encourages SFHGLP loan servicers to evaluate forbearance alternatives for borrowers in distress due to a PDD. Precise and consistent communication with borrowers should help determine whether their difficulties are directly or indirectly related to the event, or whether the issue stems from other sources which must be addressed. Guidance relating to this topic can be found in Chapter 18 of the program Handbook.
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COVID-19: Borrowers currently experiencing a hardship due to COVID-19, or on a forbearance associated with COVID-19, may be additionally impacted by the PDD. These borrowers should continue to receive payment relief under the initial terms put in place. If further assistance is needed after the completion of the COVID-19 forbearance period due to a PDD, additional guidance will be provided.
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REPORTING: Servicers are reminded that they must report the appropriate default status codes associated with the actions taking place. These instructions apply only to USDA Electronic Status Reporting requirements and do not apply to credit bureau reporting. Servicers should confer with their legal team for requirements pertaining to credit bureau reporting. The default status codes are located on the USDA LINC Training and Resource Library, or by clicking here.
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DOCUMENTATION: Servicers should fully document their decisions when loss mitigation servicing actions are implemented. The documentation should substantiate their loss mitigation decision and should follow the Agency’s outline in “Assistance in Natural Disasters”, located in Chapter 18 of the program Handbook.
Questions regarding program policy and this announcement may be directed to the SFHGLP Servicing Division at sfhglpServicing@usda.gov or (202) 720-1452.
Thank you for your support of the Single-Family Housing Guaranteed Loan Program!
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