Problem with cashout refinance

[Brian Zaug]

Good day BPers.  I bought a duplex a few months ago, renovated it, then started the refinance.  The appraisal went great and I was ready to move forward with scheduling the closing this week.  
I have a private money lender holding the Note for 90K and I put around 35K into the deal.  Appraisal came in at 205K so  I was all set up to get all my money back. 

Yesterday, my lender, who I have used for years now and trust, called me yesterday saying I can only cashout the loan value (90K) and that they will not let me cash out the renovation costs due to some change in lending that happened just this week.   ugh.

I haven't called other banks yet as I just got this news yesterday.  I'd like to call other banks but I don't want to pay another appraisal and go threw the hoops of a cash out refi for this to happen again.

Has anyone else heard this news from their bank?    Thanks for any insight on this.  

[Scott Passman]

Sorry to hear this, but it is happening to people all over the country.  I closed on my last refinance April 3rd, but in the process of that the investor who was underwriting the loan suspended all lending a week before closing.  Thankfully, my lender repackaged it to Freddie Mac but kept all the original terms we agreed upon and ate the cost which I'm very thankful for.  Appraisals are generally good for 60-180 days, so if you just had one done you likely won't need to have another one to start the process over again.  In fact, I'm in the middle of refinancing my primary house now and it was appraised last August so the same lender actually waived the requirement of an appraisal even though it has been longer than 6 months.  I would call around and see what lenders can do for you, there should be options out there that don't require another appraisal.  Good luck!