Problem with cashout refinance

[Brian Zaug]

Good day BPers.  I bought a duplex a few months ago, renovated it, then started the refinance.  The appraisal went great and I was ready to move forward with scheduling the closing this week.  
I have a private money lender holding the Note for 90K and I put around 35K into the deal.  Appraisal came in at 205K so  I was all set up to get all my money back. 

Yesterday, my lender, who I have used for years now and trust, called me yesterday saying I can only cashout the loan value (90K) and that they will not let me cash out the renovation costs due to some change in lending that happened just this week.   ugh.

I haven't called other banks yet as I just got this news yesterday.  I'd like to call other banks but I don't want to pay another appraisal and go threw the hoops of a cash out refi for this to happen again.

Has anyone else heard this news from their bank?    Thanks for any insight on this.