FHA has made a change to the Cash-Out Refinance Mortgages that went into effect September 1, 2019, reducing the maximum LTV’s and CLTV’s from 85% to 80%. According to HUD Mortgagee Letter 2019-11sent August 1, 2019, when housing prices are on the rise, the amount of Cash-Out Refinances will soon begin to increase.

Studies have shown a link between increased foreclosures and homeowners having exercised a Cash-Out transaction.  As housing markets begin to decline and homeowners start to realize they have negative equity, they soon find themselves in an unfortunate situation dealing with foreclosure proceedings.