The U.S. Department of Agriculture announced the availability of funds ($500,000, on a first-come first-served basis) to assist qualified homeowners who are behind on payments because of last year’s hurricanes in the Individual Assistance areas of Alabama,Florida, Louisiana, Mississippi, and Texas.

Homeowners who have financed their homes through USDA Rural Development's Guaranteed Loan Program are eligible.

The new program is called the Mortgage Recovery Advance Program and will allow eligible borrowers to receive a one-time advance from their loan servicer in an amount not more than 12 months past due mortgage payments. This includes, the past due principal, interest, taxes and insurance.

Mortgage Recovery Advances are designed to assist borrowers who do not currently have the ability to support their normal monthly mortgage obligation due to a verifiable loss of income, increase in living expenses attributable to the hurricanes, and who have exhausted other home retention loss mitigation options. The advance would be applied directly to the eligible borrowers' delinquent mortgage installments in order to bring the loan into a current and performing status.

Only approved lenders, may hold Section 502 Guaranteed loans. Loan servicers processing Mortgage Recovery Advances described in this notice may not always be approved holding lenders.

Upon application, loan servicers will be reimbursed by USDA Rural Development for eligible advances made under the Mortgage Recovery Advance program. The advance amount will be recorded as a junior lien on the property, and the borrower is required to repay Rural Development at the earlier of when the Section 502 Guaranteed Loan is paid off or when the borrower no longer owns the property. This debt will be evidenced by a promissory note and mortgage or deed of trust.
  
A loan servicer may advance funds on behalf of a borrower in an amount necessary to reinstate a defaulted loan, and file a request to USDA Rural Development to be reimbursed for the amount of the advance.

All Mortgage Recovery Advances will require Agency approval prior to settlement. Each eligible advance that is executed by a loan servicer will entitle them to a one-time compensation payment of $500.00 from Rural Development to defray expenses associated with the action.

Only borrowers who do not have the ability to meet their normal monthly mortgage obligations due to a verifiable loss of income, or increase in living expenses due to the hurricanes are eligible for consideration. No more than 12 months, past-due installments, including delinquent principal, interest, real estate taxes and hazard insurance, can be advanced. Borrowers in need of assistance should work directly with their lender to arrange a suitable plan for catching up on their payments

The Notice of Funding Availability (NOFA) includes;

• Borrower Qualification Requirements 
• Loan Servicer Requirements
  
• Repayment Terms
• Instructions for Filing a Claim for Reimbursement
• Instructions how to address Subsequent Borrower Default

To view the full notice please click on the following link:

Word
Notice of Availability of Hurricane Disaster Assistance--Section 502 Guaranteed Loan Program

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Notice of Availability of Hurricane Disaster Assistance--Section 502 Guaranteed Loan Program