Delayed Financing on a Rental Bought Using Cash-out Refi Proceeds

[Randy Marsh]

I performed a Cash-Out Refinance on Property A in December 2020 and the proceeds have sat in my bank account until June 2021, where I used the refinance cash to pay all-cash for Property B.  I'd like to not wait for another 6 months to perform a Cash Out Refinance, so the Delayed Financing Exception caught my eye where you can take money out before the 6 months is up.  I understand that I cannot take more money out than my Purchase Price for the property with Delayed Financing and I am okay with that.

My concern is that under the DF rule, if cash used for the purchase of Property A came from a HELOC or Refi, then any money that I receive from the Delayed Financing needs to go towards paying down my Cash Out Refinance on Property A. Is this correct? From a documentation perspective, since the refinance money had been sitting in my bank account for 6 months before I made another purchase, does the bank ask for more than 4-5 months worth of statements to verify source of funds for purchase of Property B? Any experience? Thanks!!

Here is the Fannie Mae link and the excerpt:

https://selling-guide.fanniema...

"If the source of funds used to acquire the property was an unsecured loan or a loan secured by an asset other than the subject property (such as a HELOC secured by another property), the settlement statement for the refinance transaction must reflect that all cash-out proceeds be used to pay off or pay down, as applicable, the loan used to purchase the property. Any payments on the balance remaining from the original loan must be included in the debt-to-income ratio calculation for the refinance transaction."