Loans in Forbearance or Deferral

Student loans in forbearance or deferral

• The borrower must qualify with 1% payment or document Student Loan lender has removed student loan(s) from forbearance or deferral.

• The borrower can typically request and document removal from forbearance or deferral thru the Student Loan lender online portal.

• Cannot CTC or close without documentation from Student Loan lender or must qualify with 1% payment.

Other debts

• Ok to proceed with Borrower LOE and qualify with full standard monthly payment.

Mortgage Forbearance or Deferral

• Borrower(s) currently in mortgage forbearance or deferral on any mortgage are ineligible.
  This includes refinance or purchase transactions, all loan types – Conv, FHA, VA, USDA.

• Borrower must exit forbearance/deferral and pay all missed payments prior to CTC. The lender must document the satisfactory source of funds used to pay any missed payments.

• Borrower cannot close on a new purchase or refinance while in mortgage forbearance or deferral.

• Proceeds from the sale of the current home or a refinance may not be used to pay or reinstate any mortgage loan.

If the borrower is in mortgage forbearance or deferral on any mortgage loan, PRIOR TO CTC must document borrower is no longer in forbearance or deferral with one of the following – updated Credit Report and Credit Supplement

IF borrower skipped any payments with one of following

• VOM with payment history;

• Mortgage Statement from the borrower; or

• Payoff Statement (on refinance) Mortgage or Payoff Statement must confirm no more than current payment and interest due.

• If NO payments were skipped and no payments were over 30 days late, ok to proceed.

If ANY payments were skipped or paid over 30 days late must also meet the following prior to CTC –

Conventional DU A/E – ok to proceed to assume the above requirements met including confirming borrower current, no longer in forbearance or deferral, and satisfactory verification of funds to bring the account current prior to CTC.

Conventional LP Accept – in addition to meeting the above, prior to CTC, the borrower must provide documentation confirming forbearance completion date, and make 3 more monthly scheduled payments from date forbearance or deferral was completed as evidenced by updated Credit Report.

FHA, VA, USDA – in addition to meeting the above, prior to CTC, the borrower must make 12 more monthly scheduled payments as evidenced by the new Credit Report.