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RHS/USDA Direct Loans

As a part of the United States Department of Agriculture (USDA) Rural Development, the mission of the office of Housing and Community Assistance is to improve the quality of life in rural areas.  Direct Housing Loans, known as Section 502 loans, is a Housing and Community Facilities Program (HCFP) primarily to help low-income individuals or households purchase homes in rural areas.

Applicants for direct loans from HCFP must have very low or low incomes.  Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance, which are typically 24% of an applicant's income.  However, a payment subsidy is available to help applicants make their monthly loan payment.  Applicants must be unable to obtain credit elsewhere, yet have reasonable credit histories.  The length of the loan can be up to 33 years (38 for those with incomes below 60 percent of the area median income and who cannot afford 33-year terms).  The term is 30 years for manufactured homes.  Also the home must be on a property eligible site.

How To Tell If You Have A RHS/USDA Direct Loan

USDA direct loans are loans made to you directly by the federal government through the Rural Development loan program.  A USDA direct loan is sometimes referred to as a “farm loan," but "farm loan" is more of a generic term that also refers to Rural Housing Service guaranteed loans which are different from USDA direct loans.  USDA direct loans are often at a very low interest rate and may be subsidized.  If you have a USDA direct loan, you make loan payments directly to the federal government and must periodically update your income information.  In fact, you may have online access to your USDA Rural Development direct mortgage loan account.

I Missed A Mortgage Payment. 
What Are My Options With A RHS/USDA Direct Loan

The USDA Rural Development, Rural Housing Service, direct home loans are serviced by the Centralized Servicing Center (CSC), located in St. Louis, Missouri.  The CSC services mortgage loans and grants to individuals in rural areas throughout the United States.  You should contact the CSC early on at 1-800-793-8861 to discuss options to resolve a delinquency.  The CSC will ask for the following information when you call:

  • Your loan number;

  • Your total monthly gross income;

  • A list of all your financial obligations
    (You will find sample income, expense and asset forms as part of the
    Ohio Mortgage Help Workbook (pdf), beginning at page 13.); and

  • The reasons for late or missed payments.

You don't have to be 30 days or more past due on your mortgage to begin talking to the CSC about options to avoid foreclosure.  You may be current or less than 30 days past due on the mortgage payment but experiencing a significant reduction in income or some other hardship that will prevent you from making the next required payment on the mortgage during the month in which it is due.

The sooner you call the CSC to resolve the problem, the easier it will be to fix.  There is an embarrassment factor for the homeowner who is behind on the mortgage, but don't let that prevent you from calling.  CSC personnel deal with this problem all the time and there are special programs specifically for homeowners in this situation.  The CSC looses money if it has to foreclose, so fixing the problem is in everyone's best interest.

For USDA direct loans, because the lender is the US Government, most of the traditional foreclosure avoidance options are not available.  Instead, you may be offered one or more of the CSC's foreclosure avoidance options listed below:

  • Arrangements to pay the amount past due amount over a period of time;

  • A revised payment subsidy; or

  • A Moratorium (payment deferment).

A moratorium is the primary means of resolving a delinquency.  Moratoriums are typically available to homeowners who have experienced an involuntary drop in income of at least 20%.  As part of a moratorium, payments are temporarily suspended for up to two years.  This is designed to provide you temporary financial relief, allowing you time to get your finances in order and re-evaluate your loan subsidy (monthly payment).  At the end of the moratorium, regular payments will resume and missed payments will be added to the end of the loan.

Remember as with any mortgage loan, your first step should be to contact your lender, which in the case of a Rural Housing Service, direct home loan is the Centralized Servicing Center (CSC).  It may also be useful to call a free local HUD certified housing counselor who can help you understand the foreclosure avoidance options offered by the CSC and help with the necessary paperwork and forms. 

If your request for foreclosure avoidance assistance is denied by the USDA, there is a three-tiered appeals process.  You can request a reconsideration (where the USDA reevaluates its decision to deny a request for assistance), a mediation (where the dispute is heard in front of a non-binding mediator) or a formal appeal to the National Appeals Division (where your situation is reviewed and ruled upon by a neutral third party).  The USDA will send you detailed information for beginning these processes if it denies your request for assistance.

You can always contact the USDA directly via the Centralized Servicing Center. 

For information about your past due mortgage loan or options available if you are having difficulty making your payments, call


to speak with a Counselor, Monday through Thursday 7 a.m. to 9 p.m., Friday 7 a.m. to 5 p.m.  Have your loan number and last four digits of your social security number ready when you call.

For general inquiries and information about your current mortgage loan, call:


to speak with a Customer Service Representative, Monday through Friday 7 a.m. to 5 p.m. Central Time.  Have your loan number and last four digits of your social security number ready when you call.

This website provides general legal information and not legal advice.  The law is complex and changes frequently. 
Before you apply any general legal information to a particular situation, consult an attorney. 
If you cannot afford an attorney call 1-866-Law-Ohio (1-866-529-6446) or visit OhioLegalHelp.org for your closest legal aid office.