March 28, 2023 — Comments

On behalf of our low-income clients, the National Consumer Law Center, Center for Responsible Lending, and National Housing Law Project submitted comments on the Rural Housing Service’s (RHS) proposed rule regarding Mortgage Recovery Advances (MRA).

The advocates support RHS’s use of MRA to help borrowers reinstate past due mortgage amounts and to defer principal to the end of the borrowers’ loan term at 0% interest. These uses of MRAs help borrowers reach affordable payment arrangements with their servicers and, thus, avoid foreclosure. RHS’s proposed rule will improve borrower access and borrower comprehension of MRAs by eliminating the use of subordinate mortgages to secure the MRA payments from the agency. Instead of requiring subordinate mortgages, which involve execution of burdensome documents and which can obscure the full amount due on the loan, the advocates support RHS’s proposal to rely on the servicer’s first lien mortgage to secure the MRA.

However, the advocates strongly urge RHS to amend proposed rule 7 C.F.R. § 3555.304(d)(6) through the
implementation of an affordable repayment plan, based on the borrower’s existing monthly mortgage payment, for borrowers who reach their maturity date and face substantial MRA balloon payments.