New Cash Out Refinance Requirements

[Gregory Hunt]

Hello there! Could someone give me a little more color on the new Fannie Mae guidelines for initiating a cash out refinance? Would love any thoughts around how BRRRR strategies are changing with this new update!

https://capitalmarkets.fanniemae.com/mortgage-backed-securities/updates-cash-out-refinance-eligibility

According to this article: 
Today, Fannie Mae updated its eligibility policy for cash-out refinance transactions to require that any existing first mortgage being paid off through the transaction be at least 12 months old as measured from the note date of the existing loan to the note date of the new loan.

Lenders are encouraged to implement these changes immediately but must do so for all cash-out refinances with note dates on and after April 1, 2023.

[Jay Hurst]

Quote from @Gregory Hunt:

Hello there! Could someone give me a little more color on the new Fannie Mae guidelines for initiating a cash out refinance? Would love any thoughts around how BRRRR strategies are changing with this new update!

https://capitalmarkets.fanniemae.com/mortgage-backed-securities/updates-cash-out-refinance-eligibility

According to this article: 
Today, Fannie Mae updated its eligibility policy for cash-out refinance transactions to require that any existing first mortgage being paid off through the transaction be at least 12 months old as measured from the note date of the existing loan to the note date of the new loan.

Lenders are encouraged to implement these changes immediately but must do so for all cash-out refinances with note dates on and after April 1, 2023.

 @Gregory Hunt    IF ANY financing was used to buy the property (including conventional, non-qm, hard money, your uncle Larry who recorded a note) you will  have to wait 12 months, instead of 6, to get CASH OUT on a conventional loan.  I bold cash out because it does NOT effect seasoning to refinance just what is owed.  With our borrowers we simply do a cash out loan out of our balance sheet (with no pre-payment penalty) up to the max loan to value for conventional loan then immediately refinance into a conventional loan. Again, no seasoning required because the conventional loan is a rate/term with no cash out.   We have been doing this for years, just more of need now with the 6 months doubling to 12 months.