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18.15 SPECIAL RELIEF ALTERNATIVES FOR DISASTER ASSISTANCE
In addition to the standard workout options in Attachment 18-A, The Loss Mitigation
Guide, servicers may offer the following special relief alternatives depending on the borrower’s circumstances.
A. Special Relief Alternatives:
Borrowers must meet all the following eligibility criteria:
x The borrower occupies, as their primary residence, the property securing the
guaranteed loan. x The loan was current or less than thirty (30) days past due as of the date the
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applicable PDD was declared. x The servicer receives verification from the borrower the hardship
(employment and/or property) has been resolved. x The total modified mortgage principal and interest payment is less than or
equal to the payment prior to modification. If the borrower meets the conditions above, the servicer may offer any one of the following options with no financial review:
x Payment Deferral: If the servicer determines the borrower can maintain the
current contractual payment including any escrow shortage created by advances during the forbearance period, spread over 60 months, the missed payments may be deferred to the end of the loan term. USDA does not allow any type of balloon payment as part of the guaranteed UPB. Therefore, the term must be extended along with the deferral, thus allowing the borrower to make regular payments until the deferred balance is paid in full. Any interest accrued during the forbearance period should be included in the deferred balance. x Capitalization of Delinquency and Term Extension: If the servicer determines
the borrower can maintain the current contractual payment but cannot manage the additional escrow repayment amount, the servicer may offer a “Cap and Extend Modification” under the following terms:
o Capitalize the accumulated arrearages and eligible unreimbursed servicer
advances, fees, and costs into the modified mortgage balance.
o Extend term for a total of up to 360 months.
o Modify the interest rate to no more than 50 basis points greater than the
most recent Freddie Mac Weekly Primary Mortgage Market Survey
(PMMS) Rate for 30-year fixed-rate conforming mortgages (U.S. Average), rounded to the nearest one-eighth of one percentage (0.125%), as of the date a plan is offered to the borrower.
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x Mortgage Recovery Advance: The servicer may utilize a Mortgage Recovery
Advance (MRA) to settle the borrower delinquency and bring the borrower current. The MRA is limited to an amount no greater than what is necessary to resolve any accumulated delinquency and unreimbursed servicer advances made during the forbearance and must meet all other requirements as explained in Section 5(J) of the Loss Mitigation Guide found in Attachment 18-A of this Chapter.