A borrower is eligible for a Cash-Out Refinance if the Borrower has completed the forbearance plan and made at least 12 consecutive monthly payments post forbearance.
Housing Obligations/Mortgage Payment History (TOTAL), (II.A.4.b.iii(K))
For Cash-Out Refinance Transactions
The Mortgage must be downgraded to a Refer and manually underwritten if any mortgage trade line, including mortgage line-of-credit payments reflects:
• a current delinquency;
• any delinquency within 12 months of the case number assignment date; or
• the Borrower has made less than 12 consecutive monthly payments since completion of a mortgage forbearance plan.
A Mortgage that has been modified must utilize the payment history in accordance with the modification agreement for the time period of modification in determining late housing payments.
Where a Borrower who was granted a mortgage payment forbearance and continues to make payments as agreed under the terms of the original Note, the Mortgage is not required to be downgraded to a Refer provided the Forbearance Plan is terminated at or prior to closing.
If there is a current delinquency, a delinquency within 12 months of case number assignment (per both Manual guidance II.A.5.a.iii(B)(1) and Cash-Out Refinances (II.A.8.d.v(A)(2)(a)), or the borrower has made less than 12 consecutive monthly payments post forbearance (Cash-Out Refinances (II.8.A.d.v(A)(2)), then they are not eligible for a cash out refinance.
For additional information, see:
• TOTAL and Manual Underwriting Guidelines in Handbook 4000.1 Section II.A.4, Section II.A.5 and Section II.A.8 available at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh