Section 1005.745 - Forbearance plans(a)General. Forbearance plans are arrangements between a Servicer and Borrower that may allow for a period of reduced and/or suspended payments and specific terms for the repayment plan. During the Forbearance period, where Borrower is in compliance with the Forbearance plan, the Servicer shall not proceed to First Legal Action or complete Tribal First Right of Refusal notice under § 1005.759 until expiration or default of the Agreement.(b)Informal forbearance. Informal forbearance plans are oral agreements, where permitted under Tribal or State law, between a Servicer and Borrower allowing for reduced or suspended payments and may provide specific terms for repayment. (1)Eligibility. The Servicer may offer an informal forbearance plan to a Borrower with a delinquent Section 184 Guaranteed Loan who is not experiencing a loss of income or an increase in living expenses that can be verified.(2)Duration. The period shall be three months or less.(c)Formal forbearance. Formal forbearance plans are written agreements executed by the Servicer and Borrower, allowing for reduced or suspended payments and such plans may include specific terms for repayment. (1)Eligibility. The Servicer may offer a formal forbearance plan when: (i) The Borrower is not experiencing a loss of income or increase in living expenses that can be verified; or(ii) If the Servicer determines that the Borrower is otherwise ineligible for other loss mitigation options but has sufficient surplus income or other assets that could repay the indebtedness.(2)Agreement. The Servicer shall execute a written agreement with the Borrower outlining the terms and conditions of the formal forbearance. The Servicer must include in the formal forbearance agreement a provision for the resumption of monthly payments on a date certain, with repayment in amounts which will completely reinstate the Section 184 Guaranteed Loan no later than the original maturity date. The Servicer must retain in the servicing case binder a copy of the written formal forbearance agreement postponing principal and interest payments.(3)Duration. The repayment period shall be equal to or greater than three months but not to exceed six months, unless authorized by HUD.(4)Required documents. The Servicer must obtain from the Borrower any necessary supporting documentation and retain this documentation in the servicing case binder.(5)Property condition. The Servicer must conduct any review it deems necessary, including a property inspection, when the Servicer has reason to believe that the physical condition of the property adversely impacts the Borrower's use or ability to support the debt as follows:(i) Financial information provided by the Borrower indicating large expenses for property maintenance;(ii) The Servicer receives notice from local government or other third parties regarding property condition; or(iii) The property may be affected by a disaster event.(iv) If significant maintenance costs contributed to the default or are affecting the Borrower's ability to make payments under the loan or formal forbearance agreement, the Servicer may provide in the formal forbearance agreement a period of loan forbearance during which repairs specified in the agreement will be completed at the Borrower's expense.(d)Special forbearance-unemployment. The special forbearance-unemployment loss mitigation option is available when one or more of the Borrowers has become unemployed and the loss of employment has negatively affected the Borrower's ability to continue to make their monthly Section 184 Guaranteed Loan payment. It is a formal forbearance plan with a written agreement executed by the Servicer and Borrower, allowing for reduced or suspended payments and such plan may include specific terms for repayment. (1)Eligibility. The Servicer must ensure that the Borrower meets all the following eligibility requirements:(i) The Section 184 Guaranteed Loan must be at least three months in default.(ii) The Borrower is experiencing a verified loss of income or increase in living expenses due to loss of employment.(iii) The Borrower must continue to occupy the property as a Principal Residence.(iv) The Borrower must have a verified unemployment status and no Borrower is currently receiving continuous income; or an analysis of the Borrower's financial information indicates that special forbearance-unemployment is the best or only option available for the Borrower.(2)Agreement. The Servicer shall execute a written special forbearance-unemployment agreement with the Borrower outlining the terms and conditions of the special forbearance-unemployment. The Servicer must include in the special forbearance-unemployment agreement a provision for the resumption of monthly payments on a date certain, with repayment in amounts which will completely reinstate the Section 184 Guarantee Loan no later than the original maturity. The Servicer must retain in the servicing case binder a copy of the written special forbearance-unemployment agreement postponing principal and interest payments.(3)Duration. The repayment period shall not exceed six months.(4)Required documents. The Servicer must obtain from the Borrower such supporting third party documentation, including receipts of unemployment benefits or an affidavit signed by the Borrower, stating the date that the Borrower became unemployed and stating that the Borrower is actively seeking, and is available, for employment. The Servicer must retain this documentation in the servicing case binder.(5)Property condition. The Servicer must conduct any review it deems necessary, including a property inspection, when the Servicer has reason to believe that the physical condition of the property adversely impacts the Borrower's use or ability to support the debt as follows:(i) Financial information provided by the Borrower indicating large expenses for property maintenance;(ii) The Servicer receives notice from local government or other third parties regarding property condition; or(iii) The property may be affected by a disaster event.(iv) If significant maintenance costs contributed to the default or are affecting the Borrower's ability to make payments under the Section 184 Guaranteed Loan or special forbearance-unemployment agreement, the Servicer may provide in the special forbearance-unemployment agreement a period of forbearance during which repairs specified in the agreement will be completed at the Borrower's expense.(e)Special forbearance-servicemember. The Servicer may, by written special forbearance-servicemember agreement with the Borrower, postpone any part of the monthly Section 184 Guaranteed Loan that represents Amortization of principal, for the period permitted by HUD under § 1005.743 . (1)Eligibility. The servicemember must be in active-duty military service and meet the criteria established in 50 U.S.C. 3911 . Dependents of servicemembers are entitled to protections in limited situations per the Servicemembers Civil Relief Act, as amended.(2)Duration. The repayment period shall be for the period of military service and three months thereafter.(3)Required documents. The Borrower shall provide the Servicer with a copy of the servicemember's deployment orders.(4)Agreement.(i) The Servicer shall execute a written special forbearance-servicemember agreement with the Borrower outlining the terms and conditions of the special forbearance-servicemember agreement. The Servicer must include in the special forbearance-servicemember agreement a provision for the resumption of monthly payments on a date certain, with repayment in amounts which will completely reinstate the Section 184 Guaranteed Loan no later than the original maturity date. The Servicer must retain in the servicing case binder a copy of the written special forbearance-servicemember agreement postponing principal and interest payments.(ii) The Servicer shall comply with all applicable requirements under the Servicemembers Civil Relief Act.(f)Continued review and re-evaluation. The Servicer shall monitor the Borrower's compliance with an agreement under § 1005.743 every 30 days, until the end of the agreement.(g)Other special forbearances. HUD may provide for a special forbearance in response to a disaster or other national emergency or other circumstances approved by the Secretary.