HUD Issues Guidelines for Underwriting FHA Loans to Borrowers with Forbearances

The Department of Housing and Urban Development last week issued underwriting guidelines for borrowers who have been previously granted forbearance due to COVID-19 or other presidentially declared disaster. Lenders may begin to implement the guidance immediately and it must be applied to loans with case numbers assigned on or after Nov. 9, 2020.

According to the guidelines, borrowers who remained current on their payments during their forbearance period are immediately eligible to refinance their current FHA-insured mortgage or obtain financing for a new loan. Borrowers who missed payments during their forbearance period but have since resolved their financial hardship and exited their forbearance agreement will require waiting periods of varying lengths depending on the loan type.