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#2165460 - 02/22/18 05:52 PM Loan Purpose
Red Raiders Offline
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Red Raiders
Joined: May 2013
Posts: 1,069
Compliance Land
I am looking at a loan for $75,000 where the funds were used to payoff the existing mortgage ($50,000) and do some remodeling ($25,000). I know the pecking order is:

1. Purchase
2. Cash-out refinancing
3. Refinancing
4. Home Improvement
5. Other

My question here is this has elements of 2, 3 and 4. They are "refinancing" their home and taking "cash-out" to do "home improvements". Is this considered a Cash-Out Refinance or just a Refinance?

Also, it appears that the only time you would have a home improvement loan is when there is not an existing mortgage being refinanced so we likely won't see many at all, correct??
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#2165464 - 02/22/18 05:57 PM Re: Loan Purpose Red Raiders
David Dickinson Offline
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Posts: 18,762
Central City, NE
Refinancing trumps everything. IF you treat cash-out's differently than other refinancing, then you would report it as a "32". If you don't, code it as "31".
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#2165466 - 02/22/18 06:02 PM Re: Loan Purpose Red Raiders
Red Raiders Offline
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Posts: 1,069
Compliance Land
This is a secondary market loan where cash-outs are treated differently. I guess I just needed some reassurance that my thinking this was a "32" was correct. Just seems so different from what it would have been coded for years.
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#2165477 - 02/22/18 06:39 PM Re: Loan Purpose Red Raiders
Monster Offline
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Posts: 500
Curious what you both mean by treating cash-outs differently? I feel like this is going to be a 'duh' moment when I see it....

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#2165478 - 02/22/18 06:41 PM Re: Loan Purpose Red Raiders
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
Read the commentary to Paragraph 4(a)(3).
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#2165479 - 02/22/18 06:45 PM Re: Loan Purpose Red Raiders
Red Raiders Offline
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Red Raiders
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Posts: 1,069
Compliance Land
We sell to Fannie Mae and cash out refinances are priced differently than refinances where it is just a rate/term refinance.
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#2165480 - 02/22/18 06:49 PM Re: Loan Purpose Red Raiders
Monster Offline
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Joined: Sep 2015
Posts: 500
Ah, I see, thanks to you both!

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