Can I get a new mortgage loan after a COVID forbearance?

Can I get a new mortgage loan after a COVID related mortgage forbearance?

Yes, homeowners who have been granted forbearance from making full payments because of the COVID-19 crisis may still be able to refinance or buy a new home when the crisis ends.

When a borrower experiences significant reduction in income due to either a Presidentially Declared major disaster, or some other hardship including the COVID-19 National Emergency that may prevent them from making the required mortgage payment, servicers may offer the borrower a Mortgage Payment Forbearance Plan as one of the Home Retention Options to avoid foreclosure.

Forbearance Plans are arrangements between a Lender and Borrower that may allow for a period of reduced or suspended payments and may provide specific terms for repayment.

Lenders recognizes the adverse impacts of such extenuating circumstances on families ability to recover and resume meeting their financial obligations and that, upon successful completion of the Forbearance, there may be the need and the opportunity for the borrower to refinance the existing mortgage to a lower interest rate, thereby lowering the monthly mortgage payment, or to a shorter term. 

Conventional Fannie Mae / Freddie Mac Loans

Homeowners who have been granted forbearance from making full payments on their Fannie Mae or Freddie Mac backed loans during the COVID-19 crisis may still be able to refinance or buy a new home when the crisis ends.

The Federal Housing Finance Agency (FHFA) has announced that Fannie Mae and Freddie Mac will permit people to obtain a new mortgage under the following conditions.

If you entered into a mortgage forbearance because of COVID-19 here are your options:

• You entered into a Covid-19 forbearance with your servicer (lender) BUT continued to make all your payments AND are current on your mortgage – the borrower is eligible for a new refinance loan or purchase loan immediately.  Borrower must call their servicer and provide proof that the forbearance plan is removed
• You entered into a Covid-19 forbearance with your servicer (lender) AND chose not to make their payments– then you can contact your servicer and pay your mortgage current AND remove the forbearance plan. You would then immediately eligible for a refinance or purchase loan. Note you do NOT have to prove where the money came from to get current)
• You entered into a Covid-19 forbearance plan with your servicer (lender) AND chose NOT to make their payments. You have not yet paid back the missed payments, and will need time to pay back the missed payments. You will need to enter into some sort of pay back plan to pay back missed payments.  You will have to make at least 3 consecutive monthly payment in your pay back plan, after which you would then be allowed to do a new refinance or purchase loan. You will need to provide proof of the payment plan and proof you've made at least three consecutive payments on the plan.

FHA Mortgage Loan Guidelines After Forbearance

Generally, a borrower who was granted Mortgage Payment Forbearance is eligible for a new FHA insured mortgage provided:

• The borrower continued to make regularly scheduled payments, AND the Forbearance Plan is terminated, or
• For Cash-Out refinances, the borrower has completed the Forbearance Plan and made at least 12 consecutive monthly payments post forbearance; or
• For Purchase and No Cash-Out refinances, the borrower has completed the Forbearance Plan and made at least three  consecutive monthly payments post forbearance; or
• For Credit Qualifying Streamline refinance, the borrower has completed the Forbearance Plan and made less than three consecutive monthly payments post forbearance; and
• For all Streamline refinance transactions, the borrower has made at least six payments on the FHA-insured mortgage being refinanced (where the FHA insured Mortgage has been modified after forbearance, the Borrower must have made at least six payments under the Modification).

Cambria Mortgage is your best mortgage lender choice in Minnesota, Wisconsin, Iowa, North Dakota, and South Dakota.

With mortgage rates you can brag about, and amazing customer service from only fully licensed Loan Officers (not low level application clerks), we make you new home purchase or refinance loan go as smooth as silk.

Experience the Cambria Mortgage difference by calling (651) 552-3681, or visiting iMortgageJoe.com.

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YES, the counter top people! Equal Housing Lender. NMLS 274132, 322798. Cambria Mortgage lends in the following states: MN, WI, SD, ND, IA, FL, TX, CO, This is not an offer to lend or to extend credit, nor is this a guaranty of loan approval or commitment to lend. The information here may not be up-to-date and may no longer be accurate. Products and interest rates are subject to change at any time due to changing market conditions. Actual rates available to you may vary based upon a number of factors. Consumers must independently verify the accuracy and currency of available mortgage programs. All loan approvals are subject to the borrower(s) satisfying all underwriting guidelines and loan approval conditions and providing an acceptable property, appraisal and title report. (C) 2020 Joe Metzler