Posted by pat/WA on 8/31/10 4:11pm
Msg #351081

News to me

This is something that I had not heard before. The HUD
states on line 303 cash due to borrower $1056.69 - Addition and/or amendment to Escrow Instructions states Cash back limited to $250.00 any excess funds are to be applied to principal loan balance.

Borrower called the loan officier. He was told that the maximum that could ever be refunded in cash to a borrower was $250.00. According to him this has something to do with mortgage fraud.

Any comments????

Reply by Bob_Chicago on 8/31/10 4:27pm
Msg #351085

I have seen many of these. Usually re-fis to lower rate.

Various lender (eg B of A) have "no cash out programs. I have seen some with $250. A while back they were no more than $2,000.
Have to do something with excess so they do a balance reduction.
Usually low doc loans, as they are just refinancing existing balance for esixting borrowers

Reply by MW/VA on 8/31/10 6:48pm
Msg #351108

Streamline refi's are no cash out, but they can net up to $500.

Reply by PAW on 8/31/10 7:47pm
Msg #351112

FreddieMac has a no-cash-out refinance program that allows borrowers to receive cash back in an
amount up to $2,000 or 2% of the refinance mortgage, whichever is less.
http://www.freddiemac.com/sell/factsheets/pdf/no_cashout_refinance_mortgage_388.pdf

The amount a lender allows is up to the lender and what loan programs they offer. A good article on "cash-out" mortgages can be found at http://tinyurl.com/yyn6fa

For more information on "no-cash-out" and "cash-out" mortgages, do a Google search and read the articles from the different sources and lenders.

Reply by ReneeK_MI on 9/1/10 5:55am
Msg #351159

Nothing new at all

and nothing to do with fraud. Loan products have always differentiated between a "cash-out" refi, and "rate & term" refi; every loan product has it's own cut-off of how much cash constitutes a "cash out", and that's at the discretion of the lender or the investor & usually specific to the product. The difference between the two types is in the rate - cash-outs carry a higher rate because they carry a higher risk (reducing equity).

Reply by Baragona/MO on 9/1/10 9:26am
Msg #351171

Re: Nothing new at all

Agreed. Also, larger lenders (like BOA) offer no-rescission refi loans on primary residences as long as the borrower is paying off a loan with the same lender and not receiving any money back at closing.

Reply by PAW on 9/1/10 9:42am
Msg #351176

That's called a "streamline" refinance

Streamlines do not qualify under Title 12 for a rescission period. That doesn't stop the lender from offering one, just that the lender is not obligated to provide a rescission period.