What eligible sources of funds may be used to reinstate a mortgage loan with missed payments?
When a lump sum payment was made to reinstate a mortgage loan on or after the loan application date for the new transaction, the lender must document the source of funds in accordance with eligible sources of funds in the Selling Guide Chapter B3-4 Asset Assessment. Any source of funds eligible for down payment and closing costs may be used for reinstatement, provided the lender documents it in accordance with existing Selling Guide requirements.
Note that if the lump sum payment was made prior to the loan application date for the new transaction, no sourcing of funds is required.
For more information, refer to the published Lender Letter LL-2020-03, Impact of COVID-19 on Originations.