Fannie Mae Limited Cash-Out Update

​In a recent Selling Guide update, Fannie Mae revised the eligibility requirements for limited cash-out refinance transactions. For applications on or after September 1, 2023, at least one borrower on the new loan must be a current owner at the time of initial loan application. Please see below for full details, including the limited exceptions to this new requirement.

Fannie Mae Selling Guide Announcement (SEL-2023-06). July 5, 2023

Eligibility requirements for limited cash-out refinance transactions

We revised the eligibility requirements for limited cash-out refinances to stipulate that at least one borrower on the new loan must be a current owner of the subject property (on title) at the time of the initial loan application. Exceptions to this policy are permitted in the following scenarios:

▪ the borrower acquired the property through an inheritance or was legally awarded the property via a legal settlement or divorce decree, or

▪ the property was previously owned by an inter vivos revocable trust and the borrower is the primary beneficiary of the trust.

Effective: Lenders are encouraged to comply with this policy change immediately but must do so for new loan applications beginning Sept. 1, 2023. DU messaging will be updated in a future release to remind lenders of this requirement.