It has been a difficult year for many rural American families, particularly those that farm. From unprecedented flooding, tornadoes, and tariffs, the “perfect storm” of challenges could have a historical impact on areas of need. During this time, many farmers and homeowners are likely to turn to the United States Department of Agriculture (USDA) and its Rural Housing Service (RHS) for support. Mortgage servicers have a big part to play in preparing and managing an influx of homeowners seeking disaster relief and loss mitigation options.
Unforeseen Weather Conditions
Millions of households in the Midwest have endured unexpected weather conditions in 2019, particularly flooding and tornadoes. The Washington Post reports that more than 380 flood gauges across US waterways have surpassed the flood threshold. Midwest states, including Kansas, Missouri, Illinois, Iowa, South Dakota, and Oklahoma, have been hit the hardest with over 170 counties in states of emergency.
At the same time, reports of tornadoes have outpaced the average number on record for this time of year by almost 200. The Farm Aid hotline, an outreach resource provided by the Farmer Resource Network, also reported an uptick in calls related to natural disasters.
The Support Network
Last month, the Trump Administration unveiled a $16 billion farm aid package to offset the impact of not only the spike in natural disasters but also the impact of new tariffs imposed on China. Earlier this week Secretary of Agriculture, Sonny Perdue, issued a press release on USDA efforts to ensure farmer assistance. It stated, “given the size and scope of these many disasters, as well as the uncertainty of the final size and scope of this year’s prevented planting acreage, we will use up to $16 billion in support for farmers and $3 billion in disaster aid.”
While aid payments, crop insurance, and other industry resources make up a large portion of the support network for farmers in crisis, mortgage servicers play an important role in helping rural homeowners triage the effects of natural disasters and unexpected events that impact their mortgages. In these instances, the USDA requires servicers to halt foreclosure activity for a minimum of 90 days, while offering a complete waterfall of disaster relief options, from loan term extensions, capitalization of delinquency and term extensions and mortgage recovery advances. Homeowners with USDA-backed loans may also be eligible for further relief payments if they purchased greater risk protection, such as crop insurance or participation in the noninsured crop disaster assistance program.
Working to help USDA borrowers avoid default in time of disaster can become complex as mortgage servicers help each rural homeowner navigate through the programs available in a time of crisis. There are numerous aspects to borrower assistance in this area, typically starting with a phone call to the servicer, who is tasked with providing support on all matters facing the impacted borrower. From payment moratoriums and insured loss processing to compounding payment assistance, each RD borrower must be queried to determine their circumstances, educated on alternatives, and then the servicer must analyze each scenario to determine eligibility for relief options. One of the biggest hurdles in managing USDA loans facing default due to disaster is ensuring readiness and consistency in approach. There is no easy way to predict when a disaster will hit, including the severity and locality of damage. But, you can leverage proven technology to provide that instant state of readiness.
Clarifire Helps You Help Them
Clarifire offers a solution that meets the needs of today’s loan servicer. Not only does CLARIFIRE® provide a sophisticated, full service, SaaS automated workflow application, it also provides a robust workout rules engine that automates eligibility requirements. With over a decade of experience in loss mitigation and process automation, Clarifire has invested in embedding the ongoing changes to the USDA rules into the CLARIFIRE product.
Contact Clarifire today to see how implementing an innovative workflow solution that automates disaster modification qualification, eligibility, and exception determination can transform how you do business with USDA RHS borrowers. CLARIFIRE is dedicated to bringing a solution that manages today’s multifaceted disaster relief challenges in an automated and compliant manner. Call 866.222.3370 or visit us at eClarifire.com.
Let us show you how to future-proof your organization with CLARIFIRE.
If you liked this blog, read these next:
- How to Make it Through the Maze of Multiple Modification Options
- The Ongoing Challenge of Collateral Rehab on Disaster-Stricken Properties
- How to Stop Operational Disruption from Disasters in 2019