By Ruth Simon | The Wall Street Journal – Fri, May 25, 2012 9:31 AM EDT

Charles Ward fell behind on his mortgage in September, just as his late wife began a losing battle with lung cancer and her medical costs soared.

His lender seized his $2,958 federal tax refund and has taken a $131 bite from each of his last four monthly Social Security checks.

"What little money I had saved up has just disappeared," says Mr. Ward, a 71-year-old former truck driver who bought his $128,000 home in Nelsonville, Ohio, in 2008. He receives about $200 a month in food stamps and takes on odd jobs to make ends meet.

Mr. Ward's lender isn't a bank. 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 such as Morton County, Kan., and Sioux County, Neb., according to data reported under the Home Mortgage Disclosure Act.

Unlike private firms, the USDA doesn't need permission from a court to start collecting on unpaid debts. It can in some cases 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.

A USDA spokesman says the agency follows all federal and state laws.

http://finance.yahoo.com/news/usda-i...es-go-bad.html

Krugman wants more of this......................... More absolute government power...............

Why doesn't anyone listen to Thomas Jefferson?

"The natural progress of things is for liberty to yield and government to gain ground."