Rural Housing Waives Ratio Requirements for MRA

Rural Housing Services (USDA) sent out a valentine to servicers in the form of a bulletin waiving its financial ratio regulations for the Stand-Alone Mortgage Recovery Advance (MRA). “We are pleased to announce a Stand-Alone MRA ratio waiver; to remove the 55 percent and 31 percent limitations from the requirements in the regulation for the Stand-Alone MRA.” The reasoning is to further help struggling homeowners in today’s current market.

This now lifted qualifications can be found under the special servicing options section in chapter 18 of the USDA servicing guide. According to the original criteria, the borrower’s back-end debt-to-income ratio must be less than or equal to 55% of their income. For a Stand-Alone MRA, the borrower’s current mortgage payment also needs to be below 31% of said income. These restrictions no longer apply, but only for the Stand-Alone MRA. The process for the other special loan servicing options remains the same.

The MRA, like the FHA partial claim, is intended to help borrowers who had a period of hardship that has since resolved. By waiving the previous ratio requirements, more borrowers will be able to become current again without making changes to their original mortgage. USDA states at the end of the bulletin that this change will remain in effect until rescinded.