Submitting FHA Cash-Out Refinance Transactions in Loan Prospector

[November 29, 2005]

The Federal Housing Administration (FHA) recently issued HUD Mortgagee Letter # 2005-43 allowing cash-out refinances up to 95 percent of the appraiser estimate value. Previously, FHA only allowed cash-out refinance transactions up to 85 percent. If you're submitting FHA cash-out refinance transactions with loan-to-values (LTVs)greater than 85 percent in Loan Prospector, you will receive a purchase restriction. If this is the only reason for the purchase restriction in Loan Prospector, FHA will accept the loan for endorsement. In an upcoming enhancement, we will update LP to allow the higher cash-out refinance loan-to-value limits.