Being told this summer cash out refi allowed on properties 7-10

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Being told this summer cash out refi allowed on properties 7-10

Elizabeth O.
Investor · Fairfax Station, VA · Member since 2014 · 95 posts · 23 votes
I was talking to my lender today and he told me that in June 2016 the guidelines are changing to allow cash out refi's on conventional loans #7-10. I've used the brrr method successfully on 2 homes so far allowing me to get back all of my money and move on to other projects. This would be great news if it's indeed true. Has anyone heard this or have any info on this? Thank you
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Georgia H.
Investor · Catonsville, MD · Member since 2013 · 65 posts · 17 votes
10y

@Elizabeth O what is a brrr and #7-10?

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  • Kerry BairdPro Member
    Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
    10y

    I haven't heard this but I would be doing a happy dance if it were true! 

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  • Shaun Weekes
    Loan Officer / Processor / Life & Health Agent · Rancho Cucamonga, CA · Member since 2014 · 1k+ posts · 757 votes
    10y

    Right now it's 6 and you can do 5 - 10 with delayed financing but we will just have to see when the next update comes out for Fannie to be 100% sure.

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  • Elizabeth O.
    OP
    Investor · Fairfax Station, VA · Member since 2014 · 95 posts · 23 votes
    10y

    @Kerry Baird I'm searching hard to find this.

    I trust my lender but need to verify.  Does this pertain? Multiple financed properties. Fanniemae.com 3/29/2016

    Effective June 25,  2016

    •  eligibility restrictions for DU loan casefiles and manually underwritten loans related to LTV, CLTV, and HCLTV and cash-out refinances have been removed, and are now aligned with standard eligibility.
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  • Georgia H.
    Investor · Catonsville, MD · Member since 2013 · 65 posts · 17 votes
    10y

    @Elizabeth O what is a brrr and #7-10?

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  • Georgia H.
    Investor · Catonsville, MD · Member since 2013 · 65 posts · 17 votes
    10y

    @Elizabeth O what is a brrr and #7-10?

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  • Elizabeth O.
    OP
    Investor · Fairfax Station, VA · Member since 2014 · 95 posts · 23 votes
    10y
    Georgia H. Brrr stands for buy, rehab, rent, refinance. You can do cash out refinances with conventional loans number 1 through 6. As of now, when you hit loan number 7-10 you can no longer do cash out refinances with conventional loans.
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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y
    Originally posted by @Elizabeth O.:

    I was talking to my lender today and he told me that in June 2016 the guidelines are changing to allow cash out refi's on conventional loans #7-10. I've used the brrr method successfully on 2 homes so far allowing me to get back all of my money and move on to other projects. This would be great news if it's indeed true.
    Has anyone heard this or have any info on this?

    Thank you

     I know the guideline update he is speaking of, and I did not see that anywhere in it. Granted I could have missed something, but I think something like that would jump out at me as a HFD - Huge Fracking Deal.

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  • Stephanie MedellinBusiness Member
    Mortgage Broker · CA · Member since 2014 · 1k+ posts · 642 votes
    10y

    @Elizabeth O.  Did you ever find out if your lender is offering this?  

    I have seen one wholesale lender that our company brokers to that specifically says in their guidelines that they offer cash out on up to 10 financed properties seasoned more than 6 months.  I hopefully will have confirmation Monday whether or not this program is truly available, because I'm not seeing it clearly spelled out anywhere else.

    Other lenders are so vague in the guidelines (basically mimicking what Fannie Mae has in their guidelines) and don't say one way or another whether cash out (other than delayed financing) is allowed.

    [email protected]
    Stephanie Medellin, Loan Factory58 Reviews
    WebsiteView Page
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  • Louis Jeffries
    Lender · Chicago, IL · Member since 2010 · 149 posts · 127 votes
    10y

    If this is true it would be great news for the select few investors who could qualify for these stringent guidelines. For others there are other options, including stated income on unlimited properties with rates as low as 6% in individual or blanket loans 30 year fixed rates. 

    I too have done the BRRR method even though I do not qualify for a FNMA program.

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  • Jerry Padilla
    Lender · Rochester, NY · Member since 2014 · 3k+ posts · 1k+ votes
    10y

    I stay on top of guidelines and changes. I haven't heard a thing about cashing out after 6 months on properties 7-10. The only option is delayed financing if you paid cash at closing, prior to 6 months.

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  • Stephanie MedellinBusiness Member
    Mortgage Broker · CA · Member since 2014 · 1k+ posts · 642 votes
    10y

    So I got in touch with a different rep for a lender that was displaying this program in my pricing results (there are several lenders appearing to offer this, but with conflicting guidelines on their websites), and she said that Fannie was changing their guides but at the last minute postponed, and it would be coming in September.   

    I'm thinking it has something to do with the delayed release of DU 10.  It was supposed to go into effect the weekend of June 25th, and then they just postponed until late September.  Now, from what I've seen in the guidelines is that lenders can manually apply these changes until DU 10 goes into effect.  However, many probably won't, and they'll just wait until an automated underwriting decision is available.

    For anyone interested in this right now, I'm still going to find out if my other lender is in fact offering this before the release, and will try to update this on Monday.

    Here's a short quote from the DU release notes:

    Eligibility Guidelines 

    DU will use the number of financed properties amount (as determined above) to apply the following eligibility guidelines: 

    • A minimum credit score of 720 is required for borrowers with 7 to 10 financed properties. 

    • Borrowers are limited to a maximum of 10 financed properties. 

    NOTE: The LTV, CLTV, and HCLTV ratio guidelines, and the limitations on cash-out refinance transactions previously included in the multiple financed properties policy, are being removed.

    https://www.fanniemae.com/content/release_notes/du...

    These changes were actually announced in March 2016 but wouldn't be updated in DU until the release of DU 10.  The following link is where it says that the changes can be applied manually:

    Effective Date These changes will not be implemented in DU 10 until DU Version 10.0 the weekend of June 25, 2016. However, lenders can implement them immediately for DU and manually underwritten loans. Lenders will have to manually apply the minimum credit score and reserves policies as applicable. Lenders must not deliver SFC 150 on loans underwritten to the new policies. Lenders that do not implement prior to the release of DU Version 10.0 must continue to apply the current policies and deliver SFC 150.

    https://www.fanniemae.com/content/announcement/sel...

    [email protected]
    Stephanie Medellin, Loan Factory58 Reviews
    WebsiteView Page
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  • Elizabeth O.
    OP
    Investor · Fairfax Station, VA · Member since 2014 · 95 posts · 23 votes
    10y

    @Stephanie Medellin

    Glad to see you bring this up again.  My lender told me again about a month ago that  something was in the works.  I look about every week but have yet to find a definite answer as to if its going to happen.  Happy to see your response and I will certainly ask if it an be manually applied.  

        If I find something that says it's a go, I'll post here.  

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