Can I borrow a new mortgage after a forbearance?
Sometimes, with conditions and perhaps pricing increases.
I was told it wouldn’t show…
It shows. Tell your new lender upfront and get the rules. It
appears as deferred on your credit report and lenders require current mortgage
statement and/or mortgage history. As soon as you authorize a knowledgeable
loan officer to pull your mortgage credit report it appears.
Most of these programs were paid by the US government,
servicers, and sometimes the lender if the loan went into forbearance before it
was sold to GSE’s.
There is and was a cold hard cash cost of the forbearance –
it shows.
Very few to no lenders offered mortgage balance reduction and
now about one percent offer any mortgage balance relief in the upcoming
modification offers after the forbearance plans. The big banks say they have
statistics that show it didn’t work in the last downturn
But, but, I didn’t agree to forbearance…
Then you need to show you made the same regular monthly payments
that show on your promissory note.
There are many different forbearance programs (reinstatement, deferral, flex...). You need to
have a copy of the agreement in place. Many borrowers are telling me they didn’t
sign anything but when we get the copy from the servicer or lender, it’s
signed. Some lenders accepted digital signatures.
Some programs offered half payments, some added the payments
in additional years, some offered temporary late payments with make up
additional payments after the temporary period.
Some lenders didn’t require the borrower to write a hardship letter,
but they recorded your phone call as the reason for needing the assistance.
In general, you need at minimum three normal monthly payments
showing you are back on your feet, some programs you need six actual monthly
which cannot be collected in a lump sum, you have to wait the months after the
permanent plan is in place. OR if you are still on a trial plan, you request to
go permanent and make the scheduled next three or six payments as agreed.
What if I didn’t follow the plan?
Some lenders may offer a permanent modification by offering
forty year term or they may suggest a short sale is your only option.
By mortgage product type here are how the “rules” differ:
FHA
COVID-19
Forbearance or HECM (HECM also being reverse mortgages) Extension period for
borrowers who may be newly affected by the pandemic: FHA is provided up to
six months of COVID-19 Forbearance for borrowers requesting an initial COVID-19
Forbearance or HECM Extension from their mortgage servicer between October 1,
2021, and the end of the COVID-19 National Emergency, and an additional six
months if the COVID-19 Forbearance or HECM Extension is exhausted and expires
before the end of the COVID-19 National Emergency.
An additional COVID-19
Forbearance or HECM Extension period for borrowers recently seeking assistance
in late 2021. FHA offers up to six months of additional forbearance
for borrowers who requested or will request an initial COVID-19 Forbearance or
HECM Extension from their mortgage servicer between July 1, 2021, and September
30, 2021, allowing these borrowers up to a maximum of 12 months of COVID-19
Forbearance or HECM Extension.
1. To borrow a new or to refinance of an FHA loan: a borrower who was allowed mortgage payment
forbearance is eligible for a new FHA insured mortgage when one of the
following conditions apply:
2. The
borrower continued to make regularly scheduled payments, and the mortgage
Forbearance Plan has terminated.
3. In cases
of a cash out refinance loan, “the borrower has completed the Forbearance Plan
and made at least 12 consecutive monthly payments” following the completion of
the loan forbearance agreement.
4. For
purchases and No Cash-Out refinances, the borrower has “completed the
Forbearance Plan and made at least three consecutive, on time payments after
the plan ended.
5. In cases
of a new credit-qualifying Streamline Refinance, “the borrower has completed
the Forbearance Plan and made less than three consecutive monthly payments post
forbearance."
6. For all
Streamline Refinance transactions, “the borrower has made at least six payments
on the FHA-insured mortgage being refinanced” in cases where the FHA insured
Mortgage has been modified after forbearance, the Borrower must have made at least
six payments under the Modification.
Federal Housing Administration Mortgages FHA does not require
lump sum repayment at the end of the forbearance, but having it tacked on at
the end you have to meet the rules just like for a short sale.
FHA has developed the COVID-19 Standalone Partial Claim to
assist with repayment.
If you were current or less than 30 days delinquent as of
March 1, 2020, you may be entitled to this option. A partial claim is a zero
interest, no fee, junior lien on your property that will become payable when
you sell your home, pay off your mortgage or your mortgage otherwise
terminates. If you do not qualify for the COVID-19 Standalone Partial Claim,
FHA offers other tools to help you repay the missed payments over time. For
more information on Federal Housing Administration Mortgages: email your knowledgeable
lender, call 1-800-CALL-FHA (1-800-225-5342), or visit www.hud.gov
VA
The VA loan has proved to be the most flexible in times of
need. Veterans Affairs Mortgages Servicers of VA loans cannot require borrowers
to make a lump sum payment immediately after a borrower exits a CARES Act
forbearance. VA has a suite of loss mitigation options that can assist Veteran
borrowers who must repay amounts that were subject to a forbearance. In
addition, VA is continuing to evaluate other options to further assist
borrowers affected by the novel coronavirus (COVID-19) national emergency. There
are also other VA benefits to help a veteran make the payment, https://www.benefits.va.gov/homeloans/index.asp,
USDA
Rural Housing Service Guaranteed Loan Mortgages RHS does not
require a lump sum payment at the end of the forbearance. Lenders work with the
borrowers to determine if they can resume making regular payments and, if so,
either offer an affordable repayment plan or term extension to defer any missed
payments to the end of the loan. USDA lenders hope to review all available loss
mitigation options outlined in Handbook-1-3555. It will be difficult to refinance until you
are back on your feet with 12 regular payments. Rural Housing Guaranteed Loan
Mortgages, email sfhglpservicing@usda.gov. For all other general inquiries on
policy, email SFHGLD.Program@usda.gov or www.rd.usda.gov/programs-services/single-family-housing-g
FANNIE and FREDDIE conventional
loans
Recent decision in October 2021 was to allow anyone with three
months on time payments AFTER the plan ended can refinance or get a new
purchase loan. IF you are still in the middle of a plan, you need to cancel and
get on regular payments right away if you want a new mortgage. Borrowers can do a lookup online to
determine which GSE has their loan. https://www.knowyouroptions.com/loanlookup
What if the existing mortgage is not a
government-backed home loan ?
Jumbo- probably not going to be able to find jumbo lender who
will offer a new jumbo loan until six months of on time regular payments have
passed. Case by case, and is always with Jumbo everything is double checked.
Non QM
There are very
expensive pricing adds for forbearance in past 12 months- some as high as eight
points
In conclusion, the first step is to find out what type of agreement
you have in place. Your servicer should be able to email it to you in five
working days or sooner. Provide this piece of information to your new lender to
determine when the temporary period ended and how many regular payments you
made on time.
I’m here to sort through the papers and guide you,
it’s free,
let’s chat (949) 784-9699 C G
NMLS #324982 caroline.gerardo@swmc.com
https://carolineg.swmcretail.com/
Sun West Mortgage 3277
Equal Opportunity Lender
