USDA Moretorium Offers Peace of Mind From Foreclosures & Evictions In Rural America
WASHINGTON, DC-MARCH 26, 2020
The United States Department of Agriculture Rural Development has taken a number of immediate actions to help rural residents, businesses, and communities affected by the COVID-19 crisis.
With so many out of work and in fear of losing their business and/or homes, this news out of the office of the USDA gives rural homeowners that are worried about their ability to pay their USDA home loans permission to breathe. Effective March 19, 2020, borrowers with the USDA single-family housing Direct and Guaranteed loans are subject to a moratorium on foreclosure and eviction for a period of 60 days. This action applies to the initiation of foreclosures and evictions and to the completion of foreclosures and evictions in the process.
What This Means For Current Borrowers:
- Guaranteed Loan Program: For homeowners with a Guaranteed Loan that are in default or facing imminent default because of a documented hardship can have payments reduced or suspended by their lender for a period not to exceed 12 months delinquency. One the hardship is resolved, the lender can modify the loan to cure the delinquency or make up the missed payments based on the borrower's individual circumstances.
- Direct Loan Program: For those wanting to apply or in the process of applying for a Direct Loan, the USDA has waived or relaxed certain parts of the application process for Single-Family Housing Direct Loans, including site assessments, and has extended the time period that certificates of eligibility are valid.
- Those that have a Direct Loan and are experiencing a reduction of income by more than 10 percent can request a Payment Assistance package to see if he/she is eligible for payment assistance or for more assistance than he/she is currently receiving.
- Moratorium Assistance is available for Direct Loan borrowers experiencing medical bill expenses (not covered by insurance) or job loss because of COVID-19. Qualifying borrowers can receive a moratorium on house payments for a period of time, repaid at a later date.
- Multi-Family Housing: There are several aide options for owners, management agents, and tenants of multi-family housing properties to maintain quality housing during the COVID-19 crisis also.
- Tenant certifications due March 31, April 30, and May 31 for Multi-Family properties have been extended June 30 with no late fees or overage charges, as allowed in Multi-Family guidance (HB-33560, Chapter 4, Section 4.11). This extension will allow for additional time to complete needed certifications while avoiding face-to-face meetings as recommended by the Centers for Disease Control and Prevention.
- Late fees on Section 515 mortgages will be waived, subject to waiver authority in 7 CFR 3560.403(c)(3).
- Section 515 Annual Financial Statements due March 31 will be extended 30 days, as per Multi-Family Guidance (HB-2-3560 Chapter 4, Section 4.16-H). USDA is exploring whether a longer extension is appropriate and will provide further guidance.
- Current policy states that owners must process an interim recertification at the tenant's request if there is a change in income of $50 or more per month. The owner should already have this policy in writing and apply it consistently. To the maximum extent possible, it is encouraged that all owners work with tenants that have impacted income to adjust rent payments.
- USDA encourages all owners to work with impacted residents and families to adjust rent payments, enter into forbearance agreements, and lessen the impact on affected residents At this time, no additional subsidy funding has been made available. If borrowers are temporarily unable to make loan payments, the Agency may waive late fees and enter into an official workout plan.