Hello BP, One of my properties is under a VA loan and has a lot of equity that I would like to access to pay down credit debt. I have tried with two different lenders ( Quicken Loans & Freedom Mortgage ) to cash out refinance from VA to conventional however due to the ratio of owners to renters in the condo complex these lenders are saying the guidelines set forth by Fannie Mae are restricting the loan from going through. Anyone have any advice on how to be able to refinance from VA to Conventional without going through Fannie Mae ? not only would I appreciate the cash, refinancing would also free up my ability to get another VA loan to use on my next purchase.

Conventional financing is all sold to Fannie or Freddie. There is no getting around that.  You could try a portfolio loan, but you will be lookimg at a much lower ltv.

The issue seems to be that the condo project is not an approved project with Fannie Mae. Typically this is due to the higher number of rental condo's in the project versus owner occupied? I'm not sure if Freddie Mac has different rules then Fannie Mae on this, so you can gear your questions to potential lenders in that direction? Conventional lenders are Fannie Mae and Freddie Mac. That is the extent of your choices.

You can look at a refi with VA if your still owner occupied? Maybe even a refi with FHA, but I dont do any condo's in my area, so I cant say for sure those entities will do those loans? Outside of that, you can go to local credit unions or community banks and look for a portfolio loan or look up a non-QM lender and see what they have to offer. The rates and terms will not compare to Fannie and Freddie though.

Referring to refinance cash out from VA to Conventional or FHA will be depending what the LTV and if the Condo project is an approved by Fannie or Freddie and HUD (FHA). You need to know the real reason why the mortgage underwriter or loan officer is stating loan will not go thru? Mortgage underwriter obligated when a loan is being suspended and denied must send a suspended or denial letter with reason, whether its credit, employment, debt to income ration, collateral evaluation, etc. Once that has been established then you can move forward. I hope this help.

@Justin F Leberto if this is an investment property, then yes you're stuck.  With Conventional, on an investment property, if the investor concentration is over 50%, then the project is not eligible for Conventional financing.  This does not apply to a primary residence transaction, only investment property transaction.

Interesting, I never received a denial letter from either just verbal communication from the reps handling the loan application. The property was appraised by two different appraisers, 1 appraisal for 430k and the second appraisal was for 450k. I currently owe 260K. I do have a large amount of credit debt, maybe thats why.. this is an investment property that I used to live in, but now have tenant.  

You need lender who can offer non-warrantable condo loan. Interest rate will be higher but you will be able to cash out. 

I am not sure how to go about overcoming his roadblock. However I do think it is important that you really think carefully about what your goals are and devise a budget that you can stick with to pay off credit cards and build an emergency fund if you want to go through with your plan. My concern is that if you keep on spending money which you do not have and rack up credit card debt again, you will be in the same position this time next year except without having the equity which you have now.

It is only worth it to pull out equity to pay off credit card debt if you are truly done charging up credit cards which you can’t afford to pay for. Otherwise you will pay down or pay off the credit cards with the equity in the property and then slowly but surely be back in debt again. And next time you will not have the equity to bail yourself out with.

@Justin F Leberto   This would fall under the non-warrantable condo category.  There are lenders who will loan on non-warrantable condos, but the rates are higher than conventional - probably around 6% depending on a few things like credit history.  You would have to decide whether the increased payment is worth the savings that comes from paying off debt.  If you're paying off a lot of debt there's a good chance you would still decrease your total monthly payments, but that's definitely something you'd have to think over and weigh your options.