How to refi after a COVID-19 forbearance on your mortgage.

Here's what lenders require in order to allow you to refinance after a COVID 19 related forbearance.  (Not all lenders allow a refi after a forbearance.  Always subject to change with Covid overlay updates, but currently our lenders can help.)

 A forbearance refers to when the borrower skipped payments or did NOT make all mortgage payments in full as a result of a COVID 19 related loss of income. To become eligible for a refinance, the loan must be removed from forbearance and reinstated or go through a loss mitigation solution prior to closing.

 Note:  In order to verify this, you'll need to provide documentation from the servicer (such as a forbearance cancellation letter) that identifies when the forbearance ended.

 The following condition will be added to confirm the loan was removed from forbearance: Provide documentation, such as a forbearance cancellation letter, verifying that the borrower’s mortgage has been released from forbearance. Loan may not close while mortgage remains in forbearance. Additional documentation must be provided depending on what method the borrower used to remove the loan from forbearance:

 • Reinstatement: The borrower reinstates their mortgage by paying the full forbearance amount all at once at the end of the forbearance period. Documentation must be provided to show the lump sum has been paid. If paid after the loan application date, the source of funds must be documented.

 • Repayment plan: This means a portion of the forbearance amount will be paid each month in addition to the regular monthly payment amount. The borrower must provide a copy of the repayment plan and evidence of either three consecutive payments under the repayment plan or completion of the repayment plan. If the borrower paid off the repayment amount in one lump sum after the loan application date, the source of funds must be documented.

 • Payment deferral: Deferral means the forbearance amount is added to the end of the loan. The payment deferral agreement must be provided as well as confirmation of three consecutive payments following the effective date of the payment deferral agreement.

 • Loan modifications: This occurs when the terms of the loan will be permanently changed in order to make the monthly payments more affordable. The loan modification agreement must be provided as well as documentation to show the borrower has completed the three-month trial payment period.

 To confirm that the loan was reinstated or what loss mitigation solution was used: Provide third party documentation verifying all payments made (including the date and amount of each payment) during the forbearance period for ___mortgage. If any missed or partial payments are evident during the forbearance period, the loan must be removed from forbearance. If the borrower reinstated the mortgage, documentation must be provided to show the borrower has paid the outstanding forbearance amount. If paid after the application date, provide the source of funds used. If the borrower went into a repayment plan, payment deferral or loan modification, the agreement must be provided and 3 consecutive payments since the loan was removed from forbearance must be documented.

 Also the final CD must be provided prior to CTC to confirm the mortgage loan has been paid off. A simultaneous closing is not allowed in these cases.

 I hope this information helps, these are moving targets and can/will change based on updates on Covid overlays.  I am sorry to say there are no guarantees, but at least a great starting point.