SFH Guaranteed Servicing
August 15, 2024
Single-Family Housing Guaranteed Loan Program
Final Rule for Special Servicing Options for
Non-Performing Loans
The Single-Family Housing Guaranteed Loan Program (SFHGLP) published a Proposed Rule on January 30, 2023, proposing changes to the use of special servicing options for non-performing loans and adjusting the Mortgage Recovery Advance (MRA) process. This Proposed Rule was intended to benefit borrowers and servicers by providing servicers more flexibility in their servicing options, offering a less expensive and less cumbersome MRA process, and reduce program risk of the guaranteed loan portfolio.
The Final Rule was published in the Federal Register on August 15, 2024, with an effective date of February 11, 2025.
Below are the highlights of the Final Rule:
- A final offer has been created as a pre-foreclosure alternative.
- Special Loan Servicing is no longer a separate option in the waterfall, as all Loss Mitigation options have been combined into one waterfall.
- When processing a loan modification, servicers may extend the term in one-month increments, up to a maximum of 480 months until the targeted payment reduction has been achieved.
- The ratio cap for total debt to income has been eliminated.
- MRAs executed on or after the effective date of the Final Rule will not be secured by a lien in favor of the USDA but will remain a part of the servicer’s first lien.
- A borrower may receive multiple MRAs as long as the cumulative amount of MRAs is less than or equal to 30% of the unpaid principal balance at the time of default.
To implement this rule, revisions are being made to Chapters 17, 18, and 19 of HB-1-3555, SFH Guaranteed Loan Program Technical Handbook. These changes are expected to become effective on February 11, 2025. Advanced copies of these chapters will be made available in the coming days and will be located on the LINC Training and Resource Library.
Questions regarding program policy and this announcement may be directed to sfhglpServicing@usda.gov or (202) 720-1452.
Thank you for supporting the Single-Family Housing Guaranteed Loan Program.
|
