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18.5 LOSS MITIGATION OPTIONS
The servicer will make every possible effort to assist borrowers who are experiencing an involuntary inability to pay their mortgage and show cooperation to resolve default situations using appropriate loss mitigation tools. Loss mitigation options include informal repayment agreements, special forbearance agreements, or loan modifications. Special forbearance agreements and loan modifications should be used when information in the servicing file supports the borrower’s ability and willingness to pay. Mortgage Recovery Advance (MRA) can be used to satisfy a borrower’s delinquency and bring the borrower current. A voluntary liquidation method such as a pre-foreclosure sale or a deed-in-lieu of foreclosure may be used to protect the Government’s interest once the servicer has examined other servicing options and determined the borrower cannot continue with the loan obligation. Traditional loss mitigation options must be exhausted prior to use of Streamline Options. Consideration must be given to all options prior to initiation of liquidation.
The servicer must attempt to obtain information on the borrower’s financial condition and make an informed determination of the borrower’s ability to repay the arrearage and continue making mortgage payments as scheduled. Details on consideration and processing the below actions are located in the Attachment 18-A, The Loss Mitigation Guide:
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x Servicing Early Delinquent Loans
x Informal Repayment Agreement
x Loss mitigation overview
x General policies, procedures and minimum actions that constitute effective loss
mitigation techniques
x Special Forbearance
x Loan Modification
x Mortgage Recovery Advance (unrecorded)
x Pre-Foreclosure Sale
x Deed-in-Lieu of Foreclosure
x Servicing plan, checklists; disposition cost benefit analysis
x Reporting – ESR and status of mortgage codes.
All servicers must submit loss mitigation information through USDA LINC https://usdalinc.sc.egov.usda.gov/RHShome.do.
SECTION 3: CUSTODIAL PROPERTY
[7 CFR 3555.306]