<prompt> Human: My in-laws purchased a house 30 years ago in Rhode Island and took out a USDA Farmers loan. At some times during the course of the loan there were late payments which caused a clause in their contract to be activated that made every future payment apply only toward the interest and not the principle... at this point, they have paid 30 years worth of mortgage payments and have now received this information from the USDA:The maturity date was corrected to 112013 on this loan. Unfortunately, the borrower still has a 33,000 plus balance because the account is a Daily Simple Interest loan not an Amortized loan. The principal balance is due in full on the maturity date. If it is not paid off, we can foreclose on the property. The borrowers best bet would to be to try to refinance with another lender to pay us off.Daily Simple Interest is calculated according to the principal balance after the last payment made, the interest rate, and the number of days between payments as opposed to Amortized loans which just calculate interest based on the principal balance and interest rate.Look at the payment on 04082010. The payment before that was received on 02262010. Principal balance was 33864.85 after the February payment. 33864.85 x .12 int rate x 41 days between payments from 226 to 48365 456.48 owed in interest on that payment. The payment of 664.46 plus 124.66 subsidy was applied as 446.12 to escrow and 343 to interest with 113.48 being added as uncollected interest. None of the payment went to reduce the principal as there was nothing left. For a DSI loan to pay off on time, all the payments must be made 30 days apart and this borrower often skipped months of payments.Do they have any recourse? They say that they were not informed of any of this until now.  <response>: Do they have any recourse? Its right in the letter:The borrowers best bet would to be to try to refinance with another lender to pay us off. 