Usda Rural Development Forbearance Agreement
If you live in a rural area and have a loan serviced by the U.S. Department of Agriculture (USDA), you may have heard about a forbearance agreement. But what exactly is a forbearance agreement and how does it work?
A forbearance agreement is a temporary agreement between a borrower and a lender that allows the borrower to temporarily stop making payments on their loan or to reduce their payment amount for a specified period of time. This can be helpful during times of financial hardship, such as losing a job or experiencing a medical emergency.
For USDA rural development loans, the forbearance agreement is designed to help those who are experiencing financial hardship due to COVID-19, natural disasters, or other extenuating circumstances. This agreement allows borrowers to temporarily suspend or reduce their loan payments for a maximum of 12 months.
To qualify for a USDA rural development forbearance agreement, borrowers must first contact their loan servicer to discuss their options. The loan servicer will then review the borrower`s financial situation and determine if they are eligible for a forbearance agreement.
If approved, the borrower will need to sign a forbearance agreement that outlines the terms of the temporary payment suspension or reduction. During the forbearance period, interest will continue to accrue on the loan, but the borrower will not have to make any payments.
It`s important to note that a forbearance agreement is not forgiveness of the loan. The borrower will still be responsible for making up the missed payments at the end of the forbearance period. This can be done through a repayment plan or by adding the missed payments to the end of the loan term.
In addition, a forbearance agreement may have an impact on the borrower`s credit score. While the missed payments will not be reported to credit bureaus during the forbearance period, the agreement itself may be noted on the borrower`s credit report.
Overall, a USDA rural development forbearance agreement can be a helpful option for those who are experiencing financial hardship. If you are struggling to make your loan payments, reach out to your loan servicer to discuss your options and see if a forbearance agreement is right for you.
