USDA — Homeowner Resources
The USDA Rural Development (USDA RD) administers the Section 502 Single Family Housing Guaranteed Loan Program and the Section 502 Direct Loan Program — mortgage programs that help low-to-moderate inc
About USDA
The USDA Rural Development (USDA RD) administers the Section 502 Single Family Housing Guaranteed Loan Program and the Section 502 Direct Loan Program — mortgage programs that help low-to-moderate income families in rural areas achieve homeownership. USDA loans feature zero down payment and subsidized interest rates, but USDA borrowers facing foreclosure have access to specialized loss mitigation options not available with other loan types, including the USDA Special Loan Servicing option, payment moratoriums, and interest rate reductions through the Mortgage Recovery Advance program. If you have a USDA loan, you may have more options than your servicer is telling you about — USDA servicing rules are distinct from FHA, VA, and conventional loan rules.
Website
www.rd.usda.govJurisdiction
National — covers rural areas as defined by USDA eligibility maps
Key Programs & Protections
USDA Rural Development administers the USDA home loan programs, sets servicing and loss mitigation requirements for USDA loans, and provides direct servicing for Section 502 Direct loans. USDA Centralized Servicing Center (CSC) handles delinquency and loss mitigation for direct loans.
Special Loan Servicing
USDA's primary loss mitigation option for guaranteed loans. Servicers must evaluate borrowers for Special Loan Servicing when they become 30+ days delinquent. Options include: interest rate adjustment, term extension (up to 40 years), and in some cases principal deferral through a Mortgage Recovery Advance. Servicers are required to exhaust Special Loan Servicing options before foreclosing.
Mortgage Recovery Advance (MRA)
USDA can provide a one-time advance of up to 30% of the unpaid principal balance to cure arrears, which is placed in a junior lien (soft second mortgage) with no interest and no monthly payments — it is repaid only when the home is sold or refinanced. This is a uniquely powerful USDA tool that can stop foreclosure without increasing monthly payments.
Payment Moratorium (Direct Loans)
For Section 502 Direct Loans, USDA can grant a moratorium on payments for up to 24 months during financial hardship. Interest continues to accrue but no payments are required during the moratorium period. This is available to direct loan borrowers who experience circumstances beyond their control.
Interest Rate Reduction (Direct Loans)
USDA can reduce the effective interest rate on direct loans to as low as 1% through Payment Assistance (subsidy), significantly reducing monthly payments for qualifying low-income borrowers. This subsidy is recalculated annually based on income.
How to File a Complaint
For guaranteed loan servicer issues, contact your servicer first and request USDA Special Loan Servicing in writing. If the servicer is uncooperative, escalate to: the USDA Rural Development State Office in your state, the USDA National Office (SFHGLP division), and file a CFPB complaint. For direct loans, the USDA Centralized Servicing Center handles all servicing issues — call 1-800-414-1226. Additionally, you can request a servicing review from the USDA Servicing Ombudsman for unresolved issues.
Enforcement Actions
USDA can take administrative actions against non-compliant lenders including requiring corrective servicing, imposing sanctions, revoking lender approval, requiring indemnification for losses caused by improper servicing, and referring cases to other agencies for consumer protection violations. USDA has also participated in joint federal-state servicing settlements.
Homeowner Resources
- •USDA Centralized Servicing Center: 1-800-414-1226 (direct loans)
- •USDA Rural Development State Office locator: rd.usda.gov/state-offices
- •USDA SFHGLP (guaranteed loans) servicing guide: detailed loss mitigation requirements
- •USDA Income and Property Eligibility maps: verify rural eligibility at eligibility.sc.egov.usda.gov
- •USDA RD Apply: online portal for borrower assistance and applications
Frequently Asked Questions
What special protections do USDA loan borrowers have?▼
How do I know if I have a USDA direct or guaranteed loan?▼
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