Copyright (c) 2012 Farm Credit Services of Mid-America
There are certain rules that apply to rural homeowners that have dealt with the U.S. Department of Agriculture for their housing needs. While it is important for private firms to get the court's approval before they can go forward with obtaining an overdue debt, the same rules do not apply when it comes to the USDA. The agency is authorized to seize funds, sometimes even before a foreclosure has been completed. This can include all types of government benefits and tax refunds.
According to the current federal guidelines; up to 15% of your social security payments as well as 15% of your take home pay is at risk when the USDA comes looking for their money. It can also be responsible for charging up to 28% or more when it comes to collection costs. The USDA if legally allowed can pursue any unpaid balances once a foreclosure has been completed. Even in the states where this type of action is limited with private lenders, the USDA still has power.
There are many critics these days that dislike the way this arrangement has been set up and are unhappy about the agency's collection practices. The customer base of the USDA are low income, rural homeowners that have been hit the hardest by the nation's debt crisis, housing crisis, banking crisis and wall street ballouts. People say the behavior of the USDA is like 'pulling blood from a stone' by ykeeping these practices so strict.
Several other advocates have said that the U.S. Department of Agriculture has standards that are not as flexible as many of the financial institutions in the nation. If you wish to make modifications to your mortgage, you had better go with a private lender. Restrictions are a plenty when it comes to working with the USDA on your home loan.
If you are able to get a direct loan you may be given a break from loan payments, within the limits set forth by the lending institution. This will sometimes result in them having to make much higher payments in the future due to the fact that the unpaid amount of the loan is added to their current balance due, however the entire amount is still expected to be paid back within the time frame that was originally agreed upon once the loan was put into effect.
Of course the USDA justifies it's collection practices by saying it is "legally required" to do so under the Federal Debt Collection Improvement Act of 1996. This act was instated by regulators who believed the current rules were too easy on homeowners who were not paying what they owe.
Please educate yourself on all the options that are available to you before you buy a home or refinance a mortgage. Did you check with your local credit union? Have you visited a banker in your town? Have you looked online? There are low interest deals to be had right now!. Refinance rates are currently at an all time low, anywhere from 4% to 5% in most cases for many home owners. Therefore you have plenty of options when it comes to getting the very best deal on refinancing rates when it comes to your home's current mortgage.
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Article Added on Friday, May 10, 2013
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