Confused about compliance issue regarding cash-out refinance

[Colleen Murphy]

We are working with a lender to get a cash-out financing loan on an investment property that own. But, we were just denied for the loan with the loan officer saying she was, "unable to get the refinance approved through compliance. Because of the high rates and the high cost of the rate, I am unable to pass compliance…I tried to restructure, but because of the loan amount, I have no wiggle room."

She explained that the closing costs combined with the discount rate would exceed Freddie Mac/Fannie Mae caps. We are hoping for a loan of around $150k but were told that the closing/rates total could not exceed $3,445 (but were quoted a total cost of $8,194). Anyone else running into this with rates so high? It seems like we will not be able to get a loan for this property at all given this information. We've never run into this previously but, of course, rates have never been this high during the time that we've been investing.