Below are frequently asked questions that we have addressed. This list will certainly grow as new questions are asked and answers are given and even updated as circumstances dictate.
Q: I am concerned that the COVID-19 outbreak could cause me to fall behind on my Single Family Housing Direct Loan payments from USDA’s Rural Development. What assistance can USDA provide those of us with these loans who are affected by the outbreak?
A: In support of the response efforts to the Presidentially declared COVID-19 National Emergency, USDA has placed a foreclosure and eviction moratorium on all USDA Single Family Housing Direct (SFHD) and Single Family Housing Guaranteed Loans (SFHG) loans for 60 days effective 3/19/2020.
Under the moratorium, foreclosures on borrowers with USDA SFHD loans will be completely suspended. Likewise, USDA approved lenders participating in the SFHG program have been authorized to suspend foreclosures for 60-days.
Similarly, evictions of persons from properties secured by USDA SFHD and SFHG loans are also suspended for a period of 60 days.
Q: What options are available to support Single-Family Housing Guaranteed Loan borrowers impacted by COVID-19?
A: An initial six-month forbearance is available for Single-Family Housing Guaranteed Loan borrowers impacted by COVID-19. At the borrower’s request, this forbearance can be extended an additional six months for a maximum of 12 months.
Q:My insurance premium is currently being escrowed through my USDA Single-Family Home mortgage payment. Is my insurance premium being paid in a timely manner?
A:USDA is continuing to process hazard and flood insurance premiums in a timely manner. Insurance payments should be sent to:
USDA Rural Development NFOAC
PO Box 66876
St Louis, MO 63166
Q:How can I reach RD’s Single-Family Housing Direct Customer Service Center for assistance?
A:The Customer Service Center is experiencing high call volumes during the COVID-19 pandemic. The call center has expanded its hours from 7 a.m. to 7 p.m. Central Time Monday through Friday and 8 a.m. to 1 p.m. Central Time on Saturdays.
Q:How can owners and management agents assist tenants who experience a reduction in income due to COVID-19?
A: For tenants receiving Rental Assistance, an interim recertification should be completed as quickly as possible. We encourage agents to be accurate but flexible, including receiving information by phone or email, and making accommodations when income changes can’t be verified due to business closures.
Given the high number of potential zero-income certifications, we are suspending Handbook 2-3560 Attachment 6-B used to verify living expenses for zero income interim recertifications. Tenants who have been laid off due to COVID-19 do not qualify for income annualization as mentioned in Handbook 2-3560 Chapter 6 Section 6.9 (4), as this emergency is not a seasonal or predictable layoff. Rent should be calculated based on current income.
For tenants not receiving Rental Assistance, the CARES Act signed on March 27, 2020, suspends evictions for nonpayment for a 120 day period, and restricts owners and management agents from charging late fees or otherwise penalizing tenants who are unable to pay rent. We encourage owners to be as flexible as possible with tenants during this time.
The CARES Act provides recovery payments, up to $1,200 for individuals, and $500 per qualifying child. Should these amounts be included in tenants’ income?
A: No. These payments are refundable tax credits on an individual’s 2020 taxable income that are being paid in advance. Do not include these payments when recertifying a tenant’s income.
What if a Multifamily Section 514, 515, or 538 borrower experiences financial hardship due to COVID-19 and is unable to make their mortgage payment?
A: The 2020 CARES Act allows Multifamily borrowers experiencing a financial hardship due, directly or indirectly, to the COVID–19 emergency forbearance for up to 90 days. To qualify, the borrower must have been current on its payments as of February 1, 2020. Separate communication was distributed on forbearance on April 2, 2020, but Section 514 and 515 owners may reach out to their servicing official for information on how to request a forbearance.
Can property owners and agents use property or reserve funds to alleviate financial hardship caused by non-payment of rent by residents having trouble because of COVID-19?
A: Yes. For Section 514 and Section 515 properties (see Handbook 2-3560, Chapter 4, Section 3), borrowers may utilize property operating accounts or make an authorized withdrawal of funds from a reserve account to meet an emergency shortfall in operating expenses when the emergency is beyond the control of the borrower and threatens life, safety, or the physical security of the project. Properties should reach out to their assigned Servicing Official if they anticipate needing reserve funds to pay operating expenses.
For properties with a Section 538 Loan Guarantee, the lender holds the reserves. The lender is required to protect the value of the asset, which includes proper use of reserves to protect the financial interest of the property. The lender has the discretion to use the reserves if it is in the best financial interest of the property (Handbook 1-3565, Chapter 7 Section 7).
Q:What precautions or changes to property operations can management take to promote social distancing and prevent the spread of COVID-19?
A: We encourage owners and management agents to adhere to all state and local guidance with respect to containing the spread of COVID-19. Management may take reasonable precautions, including closing playgrounds, having site staff work remotely, or delaying non-essential maintenance. However, management must not remove tenant access to essential shared amenities like laundry rooms. Access can be changed, for example – management may institute a sign-up for laundry time to ensure social distance is maintained and providing disinfecting wipes to clean the laundry machines.
If staff are no longer maintaining office hours, management must ensure tenants have a way to maintain contact, report emergency maintenance issues, and ask questions or request an interim certification. It is strongly recommended that both a phone number and email address are provided to tenants as contact options. Electronic rent payment may be offered as an option, but must not be mandatory and no additional fees may be charged. Digital signatures may be utilized during the recertification process as needed.
Please also remember that properties must consider Reasonable Accommodations to rules any COVID-19 temporary rules to accommodate persons with disabilities, such as if a tenant needs a caregiver assistance the caregiver must be allowed on the property, even if visitors to the property have been restricted.
Q: What financial flexibilities does USDA have available for current Community Facilities Direct Loan Program borrowers?
A: Borrowers under our Community Facilities Direct Loan Program may request up to one year of payment deferrals. Contact your local servicing office for more information.
Q: How is USDA Rural Development’s Community Facilities Program helping guaranteed lenders whose rural borrowers are experiencing cash flow issues as a result of the COVID-19 pandemic?
A: Guaranteed lenders are approved to unilaterally offer payment deferrals to their customers who may be experiencing temporary cash flow issues due to COVID–19. Payments may be deferred for up to 180 days from the date the original payment is due. The lender must notify USDA Rural Development in writing of any payment deferments. In addition, the lender is responsible for servicing the entire loan and for taking all servicing actions that a reasonably prudent lender would perform in servicing its own portfolio of loans that are not guaranteed. This temporary policy expires on September 30, 2020.
Q: Will lenders participating in USDA Rural Development’s Community Facilities Program need prior approval from USDA to make Small Business Administration’s Paycheck Protection Program (PPP) loans to guaranteed borrowers?
A: No, Community Facilities guaranteed lenders do not have to seek prior approval if the lender makes a covered loan under the SBA’s Paycheck Protection Program loan to a borrower. The lender must, however, notify USDA Rural Development in writing after making the covered loan. This temporary policy is in effect until September 30, 2020.
Q: How will USDA use the additional $25 million provided in the CARES Act for the Distance Learning and Telemedicine Grant Program?
A: Congress provided USDA with an additional $25 million for the Distance Learning and Telemedicine (DLT) Program. This funding became available during the DLT application window that began April 14, 2020, and closes on July 13, 2020.
Q: Does USDA provide any type of payment relief for telecommunications borrowers that have been affected by COVID-19?
A: USDA Telecom Program borrowers experiencing financial difficulty due to COVID-19 can reach out to our national office (202-720-9556) or one of our state offices for information on short-term deferrals or payment relief. These requests are evaluated on a case-by-case basis.
Q: What financial flexibilities does USDA have available for current Water and Waste Disposal Program borrowers?
A: Borrowers may request the use of reserve account funds as a short-term solution to a one-time funds shortage. Borrowers in good standing may request short-term deferred, reduced or interest-only payments for up to 180 days.
Q: What training and emergency management resources does USDA have available for Water and Waste Disposal borrowers who are affected by the COVID-19 National Emergency?
A: Technical assistance is available to assess needs, develop workout agreements, develop and/or update risk, resilience and emergency response plans, and to provide financial and utility management training. Under the USDA Circuit Rider Program, personnel can be temporarily provided to systems in need of emergency operators.
Q: Will USDA allow flexibilities for the public meeting notification requirement for water and waste projects?
A: Projects may utilize alternative methods to notify the public, for the public meeting notification requirement for water and waste projects. Such methods may include: videoconferences, teleconferences, and public notices on websites and in local newspapers as a substitute.
Q: Can RUS help electric utility borrowers gain faster access to previously obligated loan funds?
A: The RUS electric program is ready to work with its utility borrowers to speed the release of funds. The agency has announced expedited consideration of requests to move funds from one budget purpose to another to give borrowers quicker access to needed loan funds for projects or uses that have environmental clearance. The agency is also prioritizing consideration of Temporary Normal Inventory (TNI) requests, which also allows borrowers quicker access to their loan funds.
Q: Will revenue losses related to the pandemic be counted against an electric program borrower’s required financial ratios or adversely affect its future ability to borrow from RUS?
A: The agency has announced that it will waive certain 2020 financial ratios to prevent temporary revenue declines due to the COVID-19 pandemic from being the sole reason for a finding of non-compliance or being the sole reason to deny a RUS utilities borrower consideration for a future loan.
Q: Can a lender with a Rural Energy for America Guaranteed Loan offer a deferral for a rural borrower experiencing cash flow issues as a result of the COVID-19 pandemic?
A: Yes. Lenders may offer 180-day loan payment deferrals. Contact your local servicing office for more information.
Q: Can a lender with a Business & Industry Guaranteed Loan offer a deferral for a rural borrower experiencing cash flow issues as a result of the COVID-19 pandemic?
A: Yes. Lenders may offer 180-day loan payment deferrals. Contact your local servicing office for more information.
Q: What does the CARES Act provide for Business and Industry loans under the Rural Business-Cooperative Service?
A: The CARES Act provided funding that enables USDA to provide additional guarantees through the Business and Industry Guaranteed Loan program (B&I). USDA Rural Development is preparing to publish a rule and a Notice of Funding Availability (NOFA) as soon as possible.
Q: What actions can be taken by a lender to cure a defaulted guaranteed B&I loan?
A: There are several options that may be taken by a lender to cure a defaulted guaranteed loan. These include, but are not limited to, deferment of principal and/or interest payments; an additional unguaranteed temporary loan by the lender to bring the account current; reamortization or rescheduling of loan payments; transfer an assumption of the loan; reorganization, liquidation, and changes in interest rates with the Agency’s, the lender’s and any holder’s approval.
Q: Can a lender modify a USDA B&I guaranteed loan after a workout agreement?
A: Yes, a lender may modify loan terms after a workout agreement. The term of any deferment, rescheduling, reamortization or moratorium will be limited to the lesser of the remaining useful life of the collateral or remaining limits. During a period of deferment or moratorium on the guaranteed loan, the lender’s unguaranteed loan(s) and any stockholder loans must also be under deferment or moratorium.
Q: Can a lender have a balloon payment in loan servicing for a loan that is associated with a USDA B&I guarantee?
A: Yes, a lender can have a balloon payment in loan servicing. Balloon payments are permitted as a loan servicing option so long as there is a reasonable prospect for success and the remaining life of the collateral supports the action.
Q: Can a borrower through a Rural Business & Cooperative Service relending program (Intermediary Relending Program, Rural Business Development Grant, Rural Economic Development Loan and Grant, Rural Microentrepreneur Assistance Program) allow payment deferrals for loans provided to ultimate recipients?
A: Yes, borrowers participating in our relending programs may approve loan payment deferrals for their borrowers without prior approval by USDA Rural Development.
Q: How have the Rural Cooperative Development Grant (RCDC) and Socially Disadvantaged Groups Grant (SDGG) programs been affected by COVID-19?
A: USDA Rural Development is preparing to issue a Notice of Funding Availability (NOFA) for these programs. The publications will allow for a 60-day application period. Currently, there is $5.8 million available for RCDG, and $3 million for SDGG. Current recipients are permitted to work with USDA to use available grant flexibilities to complete their projects. This includes a no-cost extension in certain cases.
The CARES Act provided $100 million in additional funding to the ReConnect Program. How will USDA Rural Development distribute this money?
A: USDA will use the $100 million provided for the ReConnect Program in the CARES Act to invest in qualified 100% grant projects that did not receive funding in the program’s first round of ReConnect Program investments.
Round one applicants who did not receive funding due to limited broadband access in their proposed service area may submit an application during the second round to receive this priority.
Q: I have a USDA Rural Development loan or grant. Am I an essential worker? Can I continue to implement USDA funding during stay-at-home orders from my state or local government?
A: USDA does not determine whether or not our customers are essential workers. Customers, please contact your local or state government for more information.
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