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18.14 SPECIAL RELIEF MEASURES [7 CFR 3555.307(c)]
The servicer must suspend all foreclosure actions for affected borrowers in PDD areas effective for 90 days from the date of declaration unless extended by the Agency. This applies to both the initiation of new foreclosures as well as foreclosures already in process.
To be eligible for a suspension of foreclosure activities the property or the borrower’s place of employment must be directly affected by the PDD. During the suspension servicers should consider the following factors to determine the appropriate course of action:
x Evaluate the effects of the disaster.
x Instruct the borrower to file insurance claims and apply for disaster assistance that
may be available through FEMA, state, and local governments.
x Offer appropriate repayment plans as outlined in Section 2 of this Chapter.
x Determine if foreclosure is the only option.
The borrower’s income or ability to pay the mortgage, any increase in living expenses, the extent of damage, the delinquency status of the mortgage, and the
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availability of alternative housing are additional factors to consider. The goal should be a formal relief provision that will cure the delinquency as soon as possible without imposing an undue hardship on the borrower. Forbearance is highly encouraged in disasters. Under forbearance, the servicer can agree to reduce or suspend the borrower’s monthly payments for up to 12 months. At the conclusion of the forbearance the borrower must agree to resume his or her regular monthly payments and to pay additional money at scheduled intervals toward repayment of the amount reduced or suspended.
Regular follow-up during a suspension and reassessment of the individual borrower’s circumstances, based upon property inspections, and borrower financial information at the end of the suspension period should be conducted. If the servicer is not actively engaged in workout options with the borrower(s) and believes suspension beyond the 90- day period is warranted, the servicer must document the reason to extend a hold on all foreclosure actions and retain the documentation in their collection systems. Failure to do so may impact any future loss claim payment.
Servicers may use existing loss mitigation workout options to reinstate a borrower ready to resume mortgage responsibilities. Late charges while the borrower is on a forbearance plan, or paying as agreed on a repayment plan, should not be assessed. The servicer should take appropriate steps to mitigate the credit impact for a borrower for whom a forbearance or repayment plan is extended due to disaster-related circumstances.