The US Department of Agriculture, or USDA, does not lend money to homeowners. Instead, the USDA either guarantees or insures loans, which means that it will pay the lending banks if a homeowner cannot pay his mortgage. The USDA would like to avoid foreclosure, which is the forced selling of a house when a homeowner stops paying a mortgage. The best way to avoid foreclosure is to ask for refinancing or to have the terms of the mortgage changed so that the payments will be more manageable.
Refinance or Change the Terms of the Mortgage
Identify the conventional lender that holds the mortgage. If you do not know the name of the mortgage lender, examine the mortgage documents to see what lender is listed.
Contact the mortgage holder to see if you can renegotiate the terms and conditions of your mortgage. Keep calling the lender until you are connected with a loan officer. Ask for a lowered interest rate or extension on the length of mortgage.
Look for alternative financing. Call other lenders to see if they will offer you a second mortgage.
Talk to the local USDA Rural Development Office. They offer grants and other governmental assistance programs to rural homeowners. Be frank about your situation with the Rural Development Office and request help.
Take advantage of USDA programs for borrowers. Ask the USDA to guarantee a special forbearance, which is written repayment plan between the lender and the borrower for loans that are over 90 days past due. Under a special forbearance, the rate and length of the loan is not changed by the lender, so it is a very favorable option for a homeowner.
Ask the USDA to help you enter into a deed-in-lieu-of-foreclosure agreement. This agreement allows a delinquent borrower to voluntarily deed the property to the lender. In exchange, the lender will agree to release the borrower from all future mortgage payments. A borrower can almost always avoid foreclosure through this method.
- Make sure that you inform USDA of all loan refinancing or changes to your mortgage. Failure to do so could cause the USDA to remove its guarantee on your loan.
- If your lender is sending you letters in the mail, don't ignore them or throw them out. Respond to every letter, even if it is painful or difficult to do so. Lenders would like to work with you to avoid foreclosure.
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