USDA Updates Guidance for Direct Loan Borrowers Impacted by COVID-19

 

SFH Direct Loan and Grant Programs Monday, September 27 USDA Updates Guidance for Direct Loan Borrowers Impacted by COVID-19 PURPOSE The purpose of this notice is to announce the removal of the September 30, 2021 deadline for COVID-19 impacted Direct Loan borrowers to request mortgage payment assistance.  Direct Loan Borrowers may request assistance until the end of the National Emergency is declared Mortgage (Payment) Forbearance Guidance: Borrowers who experience financial hardship due, directly or indirectly, to the COVID-19 emergency may request and be granted an initial forbearance until the end of the National Emergency is declared. The initial forbearance period may be up to 180 days and the borrower may request an extension of up to an additional 180 days. Borrowers who received an initial CARES Act forbearance may be granted up to two additional three-month payment forbearances.  The borrower must request each extension individually. Borrowers who received a COVID-19 forbearance under this guidance may have the interest waived that accrues on missed payments during the forbearance period. Loans may be reamortized at the conclusion of the forbearance. The term of the initial forbearance and any extension may be shortened at the borrower’s request. For more information on USDA Rural Development’s actions to support customers directly impacted by COVID-19, visit https://www.rd.usda.gov/coronavirus.

Temporary Exceptions in Relation to COVID-19 Pandemic for Kentucky USDA Mortgage Loans

COVID-19 Pandemic for Kentucky USDA Mortgage Loans

Extension of Temporary Exceptions: The temporary exceptions originally issued on March 27, 2020, 

pertaining to appraisals, repair inspections, and income verifications for the Single Family 

Housing Guaranteed Loan Program (SFHGLP) due to the COVID-19 pandemic have been extended until 

February 28, 2021 and apply to the requirements in the program handbook HB-1-3555 for new loans, 

described below.

Residential Appraisal Reports – Existing Dwelling

For purchase and non-streamlined refinance transactions, when an appraiser is unable to complete an 

interior inspection of an existing dwelling due to concerns associated with the COVID-19 pandemic, 

an “Exterior-Only Inspection Residential Appraisal Report”, (FHLMC 2055/FNMA 2055) will be 

accepted. In such cases, appraisers are not required to certify that the property meets HUD HB 

4000.1 standards. The appraisal must be completed in accordance with the Uniform Standards of 

Professional Practice (USPAP) and the Uniform Appraisal Dataset (UAD).

This exception is not applicable to existing manufactured housing pilot program, new construction 

properties, or construction to permanent loans. As a reminder, appraisals are not required for 

streamlined and streamlined-assist refinance transactions.

Repair Inspections – Existing Dwelling

Loans for which a completion certification is not available due to issues related to the COVID-19 

pandemic, a letter signed by the borrower confirming that the work was completed is permitted. 

Lenders must also provide further evidence of completion, which may include photographs of the

completed work, paid invoices indicating completion, occupancy permits, or other substantially 

similar documentation. All completion documentation must be retained in the loan file.

This exception is not applicable to rehabilitation and repair loans noted in section 12.28 of HB-1- 

3555

Verbal Verification of Employment

Lenders should use due diligence in obtaining the most recent income documentation to verify the 

borrowers repayment ability prior to closing. When the lender is unable to obtain a Verbal  

Verification of Employment (VVOE) within 10 business days of loan closing due to a temporary 

closure of the borrower’s employment, alternatives should be explored.  For example, email 

correspondence with the borrower’s employer is an acceptable alternative to a VVOE. If the lender 

is unable to obtain a VVOE or acceptable alternative,  the requirement will be waived when the 

borrower has a minimum of 2 months cash reserves.

In the case of a reduction of income, the borrower’s reduced income must be sufficient to support 

the new loan payment and other non-housing obligations. Borrower’s with no income or those 

receiving unemployment benefits at the time of closing are not eligible for SFHGLP loans regardless 

of available cash reserves.

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

USDA Extends Foreclosure and Eviction Moratorium, Relief Options for Single Family Housing Direct and Guaranteed Loan Borrowers

 

Moratorium and relief options extended through February 28, 2021 Foreclosure and Eviction Moratorium Extension: The U.S. Department of Agriculture (USDA) Rural Development is extending its foreclosure and eviction moratorium for all Single Family Housing direct and guaranteed home loans through February 28, 2021, to help rural homeowners affected by the COVID-19 pandemic. The moratorium prohibits: The initiation of foreclosures or completion of foreclosures already in process, excluding on vacant and abandoned properties. Evictions of homeowners from properties bought with a USDA direct or guaranteed home loan. Loan servicers seeking to assist USDA guaranteed loan borrowers may also pursue any of the relief options referenced in Chapter 18 of the Technical Assistance Handbook-1-3555. Loan Forbearance: USDA direct home loan borrowers who have been impacted by the pandemic may request payment forbearance for up to one year. The initial forbearance period may then be extended for an additional year at the borrower's request. Lenders of USDA guaranteed home loans should continue to provide borrowers impacted by the pandemic with relief in accordance with the CARES Act by offering forbearance of the loan payment for up to 180 days. The initial forbearance period may then be extended up to an additional 180 days at the borrower's request. During the forbearance period, no accrual of fees, penalties, or interest may be charged to the borrower beyond the amounts calculated as if the borrower had made all contractual payments in a timely fashion. Upon completion of the forbearance, if the borrower can resume making regular payments, they will be offered either 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 borrower will be evaluated for all available options outlined in HB-1-3555. The special relief measures outlined in Chapter 18, Section 5 “Assistance in Natural Disasters” will apply. These options include term extensions, capitalization, and a mortgage recovery advance. Extension of Exceptions for Home Loan Requirements: The temporary exceptions originally issued on March 27, 2020, pertaining to home appraisals, repair inspections, and income verification for Single Family Housing loans due to the COVID-19 pandemic have been extended through February 28, 2021. These exceptions include: Allowing the use of exterior-only inspections when the appraiser is unable to complete an interior inspection of an existing dwelling due to concerns associated with the pandemic. Accepting a letter signed by the borrower confirming that home repair work was completed when a completion certification is not available due to issues related to the pandemic. Waiving the requirement for employment verification when a Verbal Verification of Employment or acceptable alternative cannot be obtained due to the temporary closure of the borrower's employer. Questions regarding guaranteed home loan policy and this announcement may be directed to the National Office Division at sfhglpservicing@usda.gov or (202) 720-1452. For more information on USDA Rural Development's actions to support customers impacted by COVID-19, visit www.rd.usda.gov/coronavirus.