No Seasoning on Cash Out Refi after Cash Purchase

Effective immediately on Fannie Mae loans:

Borrowers who purchased the subject property within the past six months are eligible for a cash-out refinance if all of the following requirements are met:

1. The new loan amount is not more than the actual documented amount of the borrower's initial investment in purchasing the property, plus the financing of closing costs, prepaid fees, and points (subject to the maximum LTV, CLTV, and HCLTV ratios for the transaction).


2. The purchase transaction was an arms-length transaction.


3. The purchase transaction is documented by the HUD-1, which confirms that no mortgage financing was used to obtain the subject property.


4. The source of funds for the purchase transaction can be documented (bank statements, personal loan documents, HELOC on another property). Any loans used as the source for the purchase transaction will be required to be repaid on the new HUD-1.


5. All other cash-out refinance eligibility requirements are met and cash-out pricing is applied.

Note: The preliminary title search must not reflect any existing liens on the subject property. If the source of funds to acquire the property was an unsecured loan or HELOC (secured by another property), the new HUD-1 must reflect that source being paid off with the proceeds of the new refinance transaction