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6/30/2016

Refinance Rules After Modification by Lender



Rules to Refinance AFTER Loan Modification

Mortgage RATES HAVE DIPPED AGAIN!!!!
Often Borrowers forget to tell Loan Officer/ Mortgage Banker that they completed a loan modification. Unfortunately these are handled like other credit dings such as Short Sales. One vital piece of information in determining the wait period is if forgiveness of debt (reduction of the loan amount was granted). This may not show on your credit report, however the information will be hung up with your laundry.

Below is a list of lenders and what their rules or wait periods are:


Refinance after Modification

FHA

3 year wait period if government assistance/principal write-down.
Exceptions to 3 years if substantial documentation of extenuating circumstances
Never less than 1 year.
Must have documented extenuating circumstances.
No lates on the mortgage in question in last 12 months
Must review all modification paperwork from lender.
Borrower must be in compliance with all lender’s requirements, such as occupancy time-frame, resale time-frame, if any.
Reason for short sale must be fully mitigated and supported by documentation.

Fannie requirements

Review all modification documentation and determine if there was principal forgiveness.
Obtain pay history from servicer (outside the credit report)
showing no 60 day lates in last 12 months. (as part of the deal the lender often agrees to waive or remove derogatory ratings.
Fannie wants to know if the borrower has been delinquent.)


CHASE requirements

4 year waiting with max 90 Loan to Value or Combined loan to value - in general HELOC seconds are NOT going to grant any new credit,
but a subordination of existing second may be arranged LTV/ CLTV.
7 year waiting for > 90 LTV/CLTV
3 year waiting if extenuating circumstances,
only on primary or NCO with up to 90 LTV/CLTV.
Must obtain explanation statement from borrower,
third party documentation confirming the events were isolated
and reduced Borrower income
Must review all modification paperwork from lender.
(Chase orders package from
lender not Borrower to avoid secrets)
Must go by more restrictive of these guidelines or AUS

Freddie Requirements

4 years wait
2 years wait with documented extenuating circumstances.
Must obtain explanation statement from borrower,
third party documentation confirming the events were isolated and reduced Borrower income
Must review all modification paperwork from lender.
Underwriter must comment on 1008

Wells Fargo Requirements

4 to 7 years wait
2 years wait if documented extenuating circumstance
Must review all modification paperwork from lender.
Minimum 680 credit score required
At least 10% down payment or greater if required by transaction
Reestablished credit

VA Requirements

Call the appropriate VA office to discuss the specifics of the case
Have lender modification documentation available
Depends on hardship (proof as with all these cases is a box
of paperwork to be verified)

June 2016 Caroline Gerardo copyright
(949) 784- 9699 cell
NMLS 324982
these rules of course can change

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