If the foreclosed mortgage is guaranteed by a federal agency or a Government Sponsored Entity (GSE), requirements in addition to those provided by Louisiana law will govern the state court foreclosure action. Although by the time a mortgage is foreclosed in state court, most clients have either failed to take advantage of programs available to them, or they will have applied for modification and been denied, the following sections will discuss some aspect of those programs in the following sections.

The purpose of the Federal Housing Administration (FHA) within the Department of Housing and Urban Development is to expand homeownership opportunities for people who are not adequately served by the private market.

FHA does not lend money; private lenders finance the home purchase loan, and the FHA guarantees the lender that it will be made whole in the event of a mortgage default.

Mortgage servicers of FHA loans must comply with the FHA loan servicing guidelines.1  These guidelines formerly provided six different options for homeowners who were threatened with foreclosure: forbearance, refinancing, loan modification, partial claim, pre-foreclosure sale, and deed in lieu of foreclosure. However, the COVID-19 era resulted in the suspension of some of these programs and the creation of others. Any client with an FHA loan should be referred to a HUD counselor for the latest information.

Mortgage servicers must review an FHA loan for these loss mitigation options before proceeding to foreclosure.2

HUD-guaranteed loans must be at least 3 months past due before foreclosure. Additionally, all Consumer Financial Protection Bureau rules and regulations must be complied with. HUD may pursue a deficiency judgment but currently (as of May 2023) does not do so as a matter of policy and politics.

• 1 24 C.F.R. §§ 203.500–.685.
• 2See U.S. Dep’t of Hous. & Urb. Dev., Handbook 4000.1, FHA Single Family Housing Policy Handbook tit. I, § III(A)(2)(j) (2021.

The Department of Veterans Affairs (VA) guarantees loans made by lenders to veterans. Mortgage servicers of VA loans must comply with special servicing guidelines.1  A mortgage company’s failure to comply with the VA Loan Servicing Guidelines may be a complete defense to a mortgage foreclosure action.

• 138 C.F.R. §§ 36.4275–.4283.

The United States Department of Agriculture (USDA) operates the Rural Housing Service, which provides single-family Direct and Guaranteed Loans under its directive to improve the economy and quality of life in rural America.

USDA is the lender and servicer for Direct Loans. Special servicing for Direct Loans include workout agreements, protective advances in which USDA pays taxes and insurance on behalf of borrower.

USDA Guaranteed Loans are guaranteed by the USDA against default by the borrower. USDA Guaranteed Loans will not be serviced by the USDA and will not necessarily be identifiable from the loan documents. Special loss mitigation options are available to borrowers with USDA Guaranteed Loans.1

• 1See U.S. Dep’t of Agric. Rural Dev., HB-1-3555, SFH Guaranteed Loan Program Technical Handbook ch. 18 (rev. Oct. 14, 2020).

The Consumer Financial Protection Bureau (CFPB) also imposes requirements on private mortgage lenders and servicers which, if not complied with, may be a defense to the state court foreclosure action.