"High Cost Loan" Limits on West Virginia Rental Property

[Nate Bell]

I'm getting mixed responses from lenders on a cash out refi on a property I own outright in WV. It should appraise for about $75K and I'd like to get $50-60K out of it, 30 year/fixed, Fannie/Freddie. I've been turned down by two who say that it "fails the 5% test", basically saying that the cost of the initial lending fees exceed a statutory limit of 5% of the loan amount. I have another lender, who is actually in WV, telling me that this doesn't apply to investment property, only owner-occupied. Who's right? Can I get a conventional loan on this? Here are some code excerpts:

31-17-1 (M)

"Primary mortgage loan" means any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling as defined in Section 103(w) of the Truth in Lending Act or residential real estate upon which is constructed or intended to be constructed a dwelling;

31-17-8(M)(4)

(4) Require the borrower to pay, in addition to any periodic interest, combined fees, compensation or points of any kind to the lender and broker to arrange, originate, evaluate, maintain or service a loan secured by any encumbrance on residential property that exceed, in the aggregate, six percent of the loan amount financed, including any yield spread premium paid by the lender to the broker: Provided, That reasonable closing costs, as defined in section one hundred two, article one, chapter forty-six-a of this code, payable to unrelated third parties may not be included within this limitation: Provided, however, That no yield spread premium is permitted for any loan for which the annual percentage rate exceeds eighteen percent per year on the unpaid balance of the amount financed: Provided further, That if no yield spread premium is charged, the aggregate of fees, compensation or points can be no greater than five percent of the loan amount financed. The financing of the fees and points are permissible and, where included as part of the finance charge, does not constitute charging interest on interest. To the extent that this section overrides the preemption on limiting points and other charges on first lien residential mortgage loans contained in the United States Depository Institutions Deregulation and Monetary Control Act of 1980, 12 U. S. C. §1735f-7a, the state law limitations contained in this section apply;

I don't want to keep dinging my credit or waste time going down a dead end.