HUD Reduces Maximum LTV for FHA Cash-Out Refinance Loans

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In Mortgagee Letter 2019-11, the U.S. Department of Housing and Urban Development (HUD) announced that it is reducing the maximum loan-to-value ratio and combined maximum loan-to-value ratio on cash-out refinance mortgages from 85% to 80%. The change is effective for case numbers assigned on or after September 1, 2019. The limitation will apply to the property’s adjusted value, as determined under HUD guidelines.

The change does not apply to mortgages insured under section 247 of the National Housing Act, which addresses single family mortgage insurance on Hawaiian Homelands.

HUD welcomes feedback from interested parties for a period 30 days from the August 1, 2019 date of the Mortgagee Letter. Interested parties should send feedback to the FHA Resource Center at answers@hud.gov. HUD advises that it will consider the feedback in determining the need for future updates.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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