posted: Jun. 3, 2012 @ 1:47a
The difference in how foreclosures are being handled among our government agencies is insane. Fannie and Freddie are helping borrowers by restructuring their mortgages. Private lenders are being pressured to help underwater homeowners, yet the USDA, a government agency who provides loans to rural homeowners, seized a $2900 tax refund and garnished a portion of the social security checks of a 71 year old man who is on food stamps, and taking odd jobs to make ends meet, and whose wife is terminally ill.
The first couple paragraphs of the article are posted below. You can read read the entire article here:
"Charles Ward fell behind on his mortgage in September, just as his late wife began a losing battle with lung cancer and her medical costs soared.
His lender seized his $2,958 federal tax refund and has taken a $131 bite from each of his last four monthly Social Security checks.
"What little money I had saved up has just disappeared," says Mr. Ward, a 71-year-old former truck driver who bought his $128,000 home in Nelsonville, Ohio, in 2008. He receives about $200 a month in food stamps and takes on odd jobs to make ends meet.
Mr. Ward's lender isn't a bank. It is the U.S. Department of Agriculture's Rural Housing Service, which provides mortgage loans to rural homeowners and guarantees loans made by banks."
Unlike private firms, the USDA doesn't need permission from a court to start collecting on unpaid debts. It can in some cases seize government benefits and tax refunds before a foreclosure is completed. After foreclosure, the USDA can go after unpaid balances, even in states that limit such actions by private lenders.A USDA spokesman says the agency follows all federal and state laws.
The Treasury Department collected $45 million in delinquent USDA mortgage debt from borrowers in the last fiscal year, up from $23 million in fiscal 2007. At the end of fiscal 2011, $779.2 million in delinquent USDA mortgage debt was awaiting collection, up from $420.7 million in 2007.
Edited to add the following link which still has the entire article, as well as a few other explanatory paragraphs should the article be removed:
"Since 2003, the USDA has required borrowers who take out a guaranteed loan to sign a form acknowledging the agency "will use all remedies available" to collect unpaid debt.
The Federal Housing Administration and Veterans Administration, which also guarantee mortgage loans issued by private lenders, say they generally don't pursue borrowers for debt left after foreclosure. "We'd gain nothing by placing an even greater debt burden on the borrower," an FHA spokeswoman says.
The VA says Congress in late 1989 enacted legislation preventing it from collecting deficiencies, except in cases of "fraud, misrepresentation or bad faith on the part of the veteran."
Some borrowers now say they didn't know what they agreed to when they signed the USDA form. "It was a shock when I got the note that they were going to garnish my Social Security check," says Jeanne Marie Andersen, a 74-year-old widow who lives in Lake Crystal, Minn., and took out a USDA loan in 2007....
The Treasury Department handles USDA collections of delinquent debt. Its arsenal includes taking tax refunds, seizing up to 15% of Social Security payments and garnishing up to 15% of a borrower's take-home pay. It can also tack on up to 28% to cover collection costs"