Charles Ward fell behind on his mortgage in September and his lender seized his $2,958 federal tax refund and has taken $131 from each of his last four monthly Social Security checks, but Ward’s lender isn’t a bank, The Wall Street Journal reported yesterday. It is the U.S. Department of Agriculture's Rural Housing Service, which provides mortgage loans to rural homeowners and guarantees loans made by banks. It accounted for at least a third of all mortgages issued in 2010 in sparsely populated areas, according to data reported under the Home Mortgage Disclosure Act. The USDA doesn't need permission from a court to start collecting on unpaid debts. It can seize government benefits and tax refunds before a foreclosure is completed. After foreclosure, the USDA can go after unpaid balances, even in states that limit such actions by private lenders.
