Brrrr cash out refi Fannie Mae surprise limitations?

[Jeff P.]

I will try to keep this brief.

I have 100% equity in a single-family rental outside of Detroit Michigan. I am in the process of doing a cash out refi. The house appraised for a little more than what I expected. The lender's representative and I had spoken about 75% LTV all during this scenario.

Now yesterday, I was surprised with a lender estimate that was at 70% LTV. When I requested she run the numbers at 75% LTV, she then told me that there was a cap on the amount I could get (amounts to under 75%), and I would also have to pay points for that loan (75% LTV scenarios were at 0 points). This is several thousand dollars less than I would've gotten at the full 75% LTV, but she claims it is a Fannie Mae requirement?

Why this wasn’t disclosed long ago, I have no idea. Is she correct in saying this? The difference in the appraised amount versus the expected amount was not gigantic. However, I don’t intend on refinancing this property again - possibly ever. So I would prefer to pull all cash out that I can this time.

TIA for opinions/info.

[Alan Lacey]

there is no cap at a 70 ltv. Does your initial LE show that loan was locked? If it wasn’t then that is something that should have been noted when they disclosed, and my guess is  they are trying to get closer to the terms on the LE by going to a 70 ltv as that has fewer price adjustments. Fannie publishes what they charge to price in adjustments based on different loan factors if you google fnma llpa it will come up. 

The only other reasons I could think of is 1. If going to 75 ltv and additional price adjusters were just enough to make it the loan exceed fnma points  and fees test so they have to limit to 70 to meet that requirement. 2 It was a Dti issue and they couldn’t approve you for a higher loan, but presume if that was the case they would have mentioned either reason before.