FHA recently clarified its policy regarding non-occupant co-borrowers on cash-out refinance transactions.
- A non-occupant co-borrower cannot be added to a cash-out refinance transaction.
- If the original transaction had a non-occupant co-borrower it is acceptable for them to stay on the cash-out transaction, however the loan must be downgraded to a manual underwrite and will be subject to manual underwriting guidelines and pricing.
Additionally the FHA Program matrix was updated with the following:
- FHA condo project approval must be valid at time of case number issuance.
- Clarified that a large deposit is defined as a deposit that exceed 2% of the appraised value on a refinance transaction and must be documented and verified if assets are needed to close.
If you have any questions, please contact your Account Executive.