September 23, 2019

September 20, 2019

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HUD Reduces Maximum LTV for FHA Cash-Out Refinance Loans

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

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About this Author

Richard J. Andreano, Jr. , Ballard Spahr Law Frim, Washington DC,  Business and Finance attorney, Mortgage Banking, Consumer Financial Services, Fair Lending

Richard J. Andreano, Jr., is the Practice Leader of Ballard Spahr's Mortgage Banking Group. He has devoted 30 years of practice to financial services, mortgage banking, and consumer finance law.

Mr. Andreano advises banks, lenders, brokers, home builders, title companies, real estate professionals, and other settlement providers on regulatory compliance and transactional matters, Federal Housing Administration (FHA) issues, and administrative examinations, enforcement actions and investigations. He also works with litigation counsel on devising strategies for defense of class action...

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