Situation: I bought my house on 5/11/2012 using a VA loan from Navy Federal Credit Union (NFCU). In April 2020, I refinanced my NFCU loan with a VA loan from Finance of America Mortgage LLC (FAM) paying $1,952.72 in points which can be deducted on the federal 1040 Schedule A over the life of the loan (30 years) at a rate of $5.422 per payment. My payments to FAM used Loancare LLC as the servicing agent. I made 7 payments in 2020 which allowed a deduction for points of $37.95. In July 2021, Finance of America transferred the loan servicing to Freedom Mortgage Corporation. In November 2021, I refinanced the existing VA loan (arranged with FAM but now being serviced by Freedom Mortgage) with a new VA loan with Freedom Mortgage. I paid no additional points for the November 2021 refinance.
Questions: Does the servicing transfer in July 2021 count as a ‘mortgage ending early’ event as described in IRS Publication 936? If so, can I deduct the remaining $1,914.75 on my 2021 federal tax return? If not, does the fact that I refinanced the loan being serviced by Freedom Mortgage with a new mortgage from Freedom Mortgage mean that I must prorate the remaining $1,914.75 over 360 months of the new mortgage (for $5.319 per payment)?
