FHA increases equity requirement for cash-out refinancing

Posted by Connor P. Wallmark | Mar 18, 2009 | Real Estate | 0

Effective April 1^st, in a temporary move to curb its exposure to risk, the Federal Housing Administration (FHA) will only approve cash-out refinancing for borrowers who:

have a minimum one-year history of timely payments; and

have a minimum of 15% equity in their property, up from the current 5% requirement.

The more stringent equity requirement is motivated by an increase in the number of borrowers who never make a single payment. The population of these “instant default” borrowers nearly tripled since the past year and quadrupled for borrowers who refinanced their loans.

Re: “FHA to Tighten Standards for Cash-Out Refinancing” from the Washington Post

About The Author

Connor P. Wallmark

is the President & Production Manager of firsttuesday. Connor obtained a Bachelor of Arts degree in English/Creative Writing from the University of Redlands and studied for two terms at the University of Oxford, St. Catherine’s College. Connor has worked at firsttuesday for 17 years and supervises the production of our books, forms and videos. Connor enjoys distance running and experimental music.