As a reminder, FHA Mortgagee Letter 2019-011 reduced the maximum allowable LTV and CLTV limits for cash-out refinances from 85% to 80% for all FHA cash-out refinance mortgages with case numbers assigned on or after September 1, 2019.
During the weekend of October 19, 2019, DU was updated to support the new LTV and CLTV limits and the change impacted DU Eligibility. In response, HUD issued the following statement regarding the impact of the DU Update Eligibility message:
“If the only reason the loan is Ineligible is because the LTV is between 80.01% – 85% on an FHA Cash-Out refinance and the FHA Case Number was issued prior to 9/1/19, then the Ineligible Finding on the AUS approval is resolved in compliance with FHA requirements.”
In these situations, in accordance with FHA Handbook 4000.1 II.A.4.iv.(B), the lender may underwrite the mortgage as an Accept and provide an explanation of the resolution of the eligibility in the remarks section of form HUD-92900 LT, FHA Loan Underwriting and Transmittal Summary.
Please contact CorrespondentRM@carringtonms.com with any questions.
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