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USDA Loss Mitigation Guide

ByJoshua Denbeaux December 19, 2024April 1, 2025

The U.S. Department of Agriculture sets loss mitigation rules that lenders have to follow for homeowners with USDA loans. If you have a USDA loan and are struggling to make mortgage payments, there may be loss mitigation options available to you.

The USDA loss mitigation guide sets rules for lender action on delinquent mortgages. If your lender isn’t complying with the USDA guidelines, that violation could help you defend your home from foreclosure. 

An attorney can work with you as you explore your loss mitigation options and help you negotiate with your mortgage lender to find the best solution for you and avoid foreclosure.

Joshua Denbeaux is a New Jersey foreclosure attorney who works with homeowners to help them avoid foreclosure. Contact Denbeaux Law today to learn more about how we may be able to help you. 

What Is a USDA Loan?

USDA loans are offered by traditional mortgage lenders but are insured by the U.S. Department of Agriculture. They are structured to purchase primary residences in rural areas.

In order to qualify for a USDA loan, homeowners must purchase a primary residence in a qualifying rural area and earn within the household income requirements.

USDA Loan Loss Mitigation

The Department of Agriculture has strict guidelines for lenders on how they should proceed with homeowners who are behind on their USDA loan payments. USDA loan loss mitigation has a strong emphasis on giving borrowers the best opportunity to keep their home.

With a USDA loan, lenders are expected to contact mortgagors after their mortgage payment is more than 20 days late. The USDA wants lenders to try to work with homeowners to bring them current on their mortgages.

If a homeowner’s financial situation has changed and they are no longer able to afford the mortgage, there are also loss mitigation options to help them avoid foreclosure. The USDA encourages pre-foreclosure sales of homes to avoid homeowners having to go through foreclosure.

The Department of Agriculture asks lenders to review mortgagors’ financial situations to identify servicing actions that could aid borrowers.

USDA Loan Modification

Loan modifications are commonly available for homeowners with a USDA loan. The USDA loan loss mitigation guideline outlines that missing or late mortgage payments can be rolled back into the current loan balance.

Loan modifications to a USDA loan can have a loan term extension of up to 40 total years to lower the monthly mortgage payment amount. Loan servicers also have the option to lower the borrower’s interest rate to lower the monthly mortgage payment.

Contact a Foreclosure Attorney

Struggling to make your mortgage payments can be stressful and overwhelming. If you have a USDA loan, you can take some reassurance that your lender will try to work with you to find a loss mitigation option that works for you.

If your lender is not following the USDA guidelines for loss mitigation, you could have a case to defend your home from foreclosure. An attorney can help you work with your lender to negotiate a loan modification or other loss mitigation options and help you defend your home.

Contact Denbeaux Law today to learn more about how we may be able to help you through the USDA loan loss mitigation process.

Joshua Denbeaux

Attorney

Joshua Denbeaux is a Partner at Denbeaux & Denbeaux, concentrating his practice on financial consumer rights issues and foreclosure defense. He has substantial experience in legal matters related to foreclosure, loan modification, debt collection, and the prosecution of cases related to predatory lending. Mr. Denbeaux received his law degree in 1994 from Seton Hall University after completing his undergraduate work at The College of Wooster. Mr. Denbeaux is licensed to practice in the United States District Courts for New Jersey.

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