Refinancing a Jumbo Mortgage After a COVID Forbearance

Despite some recent setbacks that see COVID cases increasing, many of us are optimistic that vaccination rates will continue to go up and all of America will eventually commit to getting the worst of the virus behind us once and for all. There is no doubt that as we headed into the summer, we could feel the economy coming back on line and the country getting back to work. Sure the recovery has been uneven, but compared to the uniform bleakness of last summer, there could only be reason for hope this time around.

Not surprisingly, the progress we’re seeing in the general economy has carried over to what we’re seeing in the mortgage industry — many homeowners who took advantage of COVID forbearance and payment deferral plans are now back to work, back on their feet, seeing those arrangements draw to a close and contemplating their best options for long-term, future financing. This happens to coincide with an ongoing low rate environment, and that has opened the door to a refinance for a good percentage of owners. But wait… If a borrower has had a recent forbearance or deferral, and has a jumbo loan, can he or she even refi at all?

The answer is “Yes!” But if you have had a forbearance or deferral plan, you have a jumbo loan and you are out there researching a refinance, you are very likely going to get some conflicting information. A key thing to remember is that not all jumbo lenders are created. Because they are not required to follow the “Agency” guidelines, that is, the rulebook that governs conforming loans as dictated by Fannie Mae and Freddie Mac, jumbo mortgage lenders will have different demands for refinancing post-COVID.  Here’s what we’re seeing for the most lenient of our investors:

Repayment Plan

The homeowner must have completed the full repayment plan or made at least three consecutive timely payments (and not missed any other payments under the program).

Payment Deferral

The homeowner must have made at least three consecutive timely payments following the effective date of the deferral agreement.

Modification Trial Payment Plan

The homeowner must have completed the trial payment plan.

If you are in doubt about whether or not you will meet the requirements above, get in touch and we can figure it out — often without any credit checks or exchange of any other personal documents. From there, if a refinance looks promising, the process is IDENTICAL to the one employed by a borrower who has not gone through any sort of hardship plan. We understand the nature of these inquiries and the place from which they stem. If you need a hand with your scenario, extend yours to us today.

Wash your hands,

Rob Spinosa
SVP of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

Can I Refinance a Mortgage on a COVID Forbearance Plan?

Back at the end of the first quarter of 2020, the president might still have wanted to downplay COVID, but many real American homeowners suddenly found themselves in dire financial straits and quickly took advantage of the forbearance plans offered by the servicers of their mortgages.  This payment relief allowed them to navigate the most uncertain and immediate impacts of the pandemic and for some, provided a bridge to re-employment and/or firmer financial footing.  Now that some of these borrowers have made readjustments to the new normal, they may wish to take advantage of the historic low interest rates that have stemmed largely from the Federal Reserve’s response to this same pandemic.  So can a borrower refinance if there has been a forbearance or deferral on the current loan?  Let’s examine the options available today if the borrower has a conforming/conventional loan.  Jumbo loans and government loans (FHA and VA) behave differently and I’ll cover those in a separate post.  But here’s what we need to know today:

  • If you are or were in forbearance with no missed payments, then we must verify that all payments were made to terms of the agreement AND the payoff of the existing loan cannot include any funds due. 
  • If you were in forbearance, had missed payment but brought them current prior to making your refinance application, then we just need verification that your mortgage is current and no funds due to complete any reinstatement are included in the loan’s payoff.
  • If you were in forbearance, had missed payments and brought them current after making your refinance application, then we need verification that your mortgage is now current and we need to source the funds used to bring the loan to that status.
  • If you have a plan for payment deferral then you must provide a copy of the agreement issued by your servicer and you must have made at least 3 consecutive payments following the effective date of the deferral agreement.  The payoff of the loan can, in this case, be used to satisfy the full amount of the mortgage, including the payments deferred.

The low rate environment that exists today is unprecedented, a lot like the adjustments we’re all being required to make as we confront our new reality.  If you’ve taken advantage of the forbearance or deferral agreements available to you, and have adhered to the terms, there’s a good chance you can refinance your conforming or high-balance conforming mortgage today at historic low rates.  You’d be incorrect to assume otherwise.  Get in touch if you think we can help. 

Mask it or casket,

Rob Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283