This bug is still occurring. I refinanced both my primary and secondary home in 2020 and both loans were later sold to other lenders in 2020. Both principal balances added together are less than $750K. TurboTax kept saying my mortgage interest would be limited because my total loan was over $750K!
There are two solutions to this scenario:
1) Enter both the "original" lender and "sold to" lender as two separate lenders but do NOT enter the "refinanced" lender since they are not your current lender any more. Combine the mortgage interest amount of the "refinanced" lender into the "sold to" lender.
-or-
2) Enter all lenders including the "original", "refinanced", and "sold to" lenders. Categorize both the "refinanced" and "sold to" lenders as refinance but only enter the actual Outstanding Mortgage Principal amount (Box #2) for the "sold to" lender. Enter "$0" for the Outstanding Mortgage Principal amount for the "refinanced" lender. This is logical because it's still the same loan but just happened to get sold to another lender. This avoids double counting the Outstanding Mortgage Principal amount for the "refinanced" and "sold to" lenders.
TurboTax needs to clarify this because many homeowners refinanced in 2020 and those loans usually get sold to other lenders.
