Reports the successful challenge of practices by the United States Department of Agriculture’s (“USDA”) Rural Development Division which was collecting past due deficiencies from low and moderate-income homeowners in rural areas where there had been a prior foreclosure. These deficiencies were being collected from homeowners using wage garnishments and the seizure of tax refunds authorized under the Debt Improvement Collection Act.
Efforts related to the lawsuit resulted in Congressional pressure on the USDA. Under a new policy, the USDA stopped pursuing borrowers for unpaid loan balances after foreclosure if the borrowers were able to demonstrate that they were unable to pay the debt.
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