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Originally Posted by Kobi
I like picking up the WSJ now and then. I always find something out about the government I didnt know and probably didnt even want to know.
Friday, they had an article on the USDA. Did you know the USDA is in the mortgage business? The USDA Rural Housing Program provides mortgage loans to rural homeowners and guarantees loans made by banks to rural homeowners. It accounted for almost a third of all mortgages issued in 2010 in sparsely populated areas.
Overall it is a small player in the market holding or backing approx a million loans totalling 84.4 billion - less than 1% of the 9.4 trillion in US mortgage debt.
But, since the mortgage crisis began in 2007, the USDA loan volumes have tripled. The agency guaranteed 16.9 billion in loans in 2011 and issued 1.1 billion in direct loans.
The agency started making loans to farmers in 1949, then expanded to other rural residents.
They allow borrowers to finance up to 102% of a homes value. And, most borrowers are low and moderate income homeowners vulnerable to job losses and falling home values.
12% of its guaranteed loans and 17% of its direct loans are delinquent or in foreclosure.
At issue in this article was the debt collection practices of the USDA. By law, they can begin going after delinquent homeowners without a court process. They can take tax refunds, seize up to 15% of social security benefits, garnish up to 15% of take home wages, and tack on 28% to cover collection costs.
On guaranteed loans, they can and do go after leftover loan money after a foreclosed property has been sold for less than was owed - a practice commercial banks stopped.
They also will allow people to stop payments even up for a couple of years in hardship cases BUT they up the payments when they resume so the loan is still paid off in the contracted length of time.
Interesting.
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That IS interesting to know. I already knew they provided loans because I was considering that kind of loan for the home I just bought. I ended up saving up enough of a down payment so I didn't need a USDA loan, but I was told about a year ago that a USDA loan was the best option if you're cash-poor but pay your bills, etc. The town I used to live in was too big to qualify, so some agent or other recommended I look in surrounding areas. After reading this post, I'm glad I didn't end up with a USDA loan, though "god willing and the creeks don't rise," I don't plan to go into default.