The VA issued a circular last week to lenders allowing us to close VA purchase loans and cash out refinances immediately even if the borrower claimed forbearance on their previous mortgage. But, the borrower must provide reasons, a letter of explanation, for the deficiency and information to establish that the cause of delinquency has been corrected. For, example if they asked for forbearance because they lost their job and are now back to work we could close a new VA loan for them right away.
But, this new circular does NOT apply to VA IRRLs which are streamlined no cash-out refinances. For these loans the borrower must have made their last 6 payments on time. For example, if a borrower made 4 payments on time and then asked for forbearance, they must make 6 consecutive on-time payments after ending forbearance before being eligible for one of these loans. Why? On these loans we are not required to verify income or employment.