USDA: Servicing Relief for Borrowers Impacted by Presidentially Declared Disaster Areas During the COVID-19 Pandemic

USDA: Servicing Relief for Borrowers Impacted by Presidentially Declared Disaster Areas During the COVID-19 Pandemic

Investor Update
September 8, 2020

Source: USDA

USDA Rural Development has taken a number of immediate actions to help borrowers across the country.  This announcement outlines relief measures for holders and/or loan servicers of USDA Single Family Housing Guaranteed Loan Program (SFHGLP) mortgages and provides guidance on assisting borrowers affected by a Presidentially Declared Disaster (PDD) area during the COVID-19 pandemic.  These borrowers may be eligible for immediate temporary relief.

To date, the President has declared a major disaster in every state and most territories in connection with COVID-19.  The following guidance applies to all borrowers affected by PDD areas in addition to the COVID-19 pandemic.  Loan servicers seeking to assist SFHGLP borrowers may pursue any of the relief options referenced in the following USDA guidance.  Complete details outlining “Assistance in Natural Disasters” is located in Chapter 18 of the online program Handbook.

1. IMMEDIATE MORATORIUM/FORECLOSURE SUSPENSION: An immediate moratorium may be put in place for borrower’s whose properties are directly impacted by a PDD area or if borrower’s place of employment is directly impacted by the PDD area. Due to the magnitude and aftermath of a major natural disaster, loan servicers must inspect properties that secure 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. The servicer must suspend all foreclosure actions for borrowers whose property has been affected by a PDD area.  This applies to both the initiation of new foreclosures, as well as foreclosures already in process.

2. FORBEARANCE: USDA encourages SFHGLP loan servicers to evaluate forbearance alternatives to borrowers in distress as a result of PDD areas. Precise and consistent communication with borrowers should help determine whether their difficulties are directly or indirectly related to the PDD areas, 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.

3. COVID-19: Borrowers currently experiencing a hardship due to COVID-19 or on a forbearance associated with COVID-19 may be impacted by a major natural disaster; these borrowers should continue to receive payment relief under the initial terms put in place. For all other borrowers, the loan servicer must evaluate the borrower for all loss mitigation options available.

4. 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 does not apply to credit bureau reporting. Servicers should confer with their legal team for requirements pertaining to credit bureau reporting. The COVID-19 default status codes are located in the Gov Delivery dated June 26, 2020.

5. 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 pf the program Handbook.

Questions regarding program policy and this announcement may be directed to the National Office Division at sfhglpServicing@usda.gov or (202) 720-1452.

Thank you for your support of the Single-Family Housing Guaranteed Loan Program!

Links to websites:

SFHGLP Lending Partner Webpage: https://www.rd.usda.gov/page/sfh-guaranteed-lender

SFHGLP webpage: https://www.rd.usda.gov/programs-services/single-family-housing-guaranteed-loan-program

USDA LINC Training and Resource Library:

https://www.rd.usda.gov/programs-services/lenders/usda-linc-training-resource-library

Procedure Notices: https://www.rd.usda.gov/resources/directives/procedures-notices

Help Resources

Policy Questions

Customer Service Center

Phone: 866-550-5887

Single Family Housing Guaranteed Loan Division

Phone: 202-720-1452

USDA ITS Service Desk Support Center

For e-Authentication assistance

Email: eAuthHelpDesk@ftc.usda.gov

Phone: 800-457-3642, option 1 (USDA e-Authentication Issues)

Rural Development Help Desk

For GUS system, outage or functionality assistance

Email: RD.HD@STL.USDA.GOV

Phone: 800-457-3642, option 2 (USDA Applications); then option 2 (Rural Development)