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Cash-out Refinance Mortgages
Use cash out for a variety of purposes

Related Products

Whether your borrowers are looking to receive cash out from the increased value of their home to use for debt consolidation, or for any other purpose, Freddie Mac's cash-out refinance mortgage options could be the solution.

Our cash-out refinance mortgage offers flexibility and variety so you can meet a diverse range of borrower needs: obtaining cash for home improvements, reducing a rate and monthly payment, paying off a purchase money junior lien used for any purpose, or paying off a leasehold interest. Plus, all related closing costs, financing costs and prepaid items can be rolled into the new loan amount, further maximizing your borrower's cash flow potential.

In addition, our special purpose cash-out refinance mortgage allows borrowers in special circumstances to use the proceeds of the refinance transaction to buy out the equity of a co-owner. With the special purpose cash-out refinance mortgage in your product line, you can now offer your borrowers another option to meet their specific needs.

Product Features

We are revising our requirements for Cash-out Refinance Mortgages effective for Freddie Mac settlements on and after January 2, 2009. Please refer to our October 17 Single-Family Seller/Servicer Guide Bulletin [PDF 183K] for more information.

Feature Requirements
Property Type
  • 1- to 4-unit primary residences, including condos, PUDs and manufactured homes.
  • Second homes
  • 1- to 4-unit investment properties
Eligible Mortgage Products
  • 15-, 20-, 30-, and 40-year fixed-rate mortgages
  • 5- and 7-year balloon/reset mortgages
  • Most ARMs
  • For cash-out refinance mortgages with an LTV ratio greater than 70%, the mortgage must be:
    • A Loan Prospector® Accept mortgage
    • An A-minus Mortgage
    • A manually underwritten mortgage with a minimum Indicator Score of 720
  • No seasoning requirement for eligible mortgages and inherited properties.
Maximum LTV Ratios for New Mortgage
Eligibility/Underwriting
  • Loan Prospector®
  • Non-Loan Prospector
  • New loan application required. No restrictions on change in borrowers.
  • Effective for mortgages with Freddie Mac settlement dates on or after August 1, 2008:
    • The borrower must have owned the subject property for at least six months prior to the note date of the cash-out refinance mortgage.
    • When a Seller originates a cash-out refinance mortgage, the Seller holds that mortgage for six months, and that mortgage is refinanced with a no cash-out refinance mortgage, the refinance mortgage is ineligible for sale as a no cash out refinance mortgage. The mortgage must be sold to Freddie Mac as a cash-out refinance mortgage.
  • No asset documentation required. Seller must verify reserves if they are entered in Loan Prospector.
  • For manually underwritten cash-out refinance mortgages, the Seller must make the determination regarding borrower creditworthiness in accordance with the requirements of the Single-Family Seller/Servicer Guide  (Guide) Section 37.4(b).
  • New appraisal and inspection report required.
  • Special requirements apply for special purpose cash-out refinance mortgages. See Guide Section 24.7.
Down Payment or Closing Costs
  • All closing costs, financing costs and prepaids can be rolled into the new loan amount.
Execution Options
  • Servicing-released Cash*
  • Servicing-retained Cash
  • WAC ARM Cash
  • Fixed-rate Guarantor
  • WAC ARM Guarantor
  • MultiLender Swap

* See our selling system availability matrix [PDF 72K] for a list of specific mortgages eligible for sale best efforts or mandatory, servicing released.
Delivery Fees
  • A cash-out refinance postsettlement delivery fee applies. Freddie Mac's cash-out refinance delivery fee is not billed for special purpose cash-out refinance mortgages delivered in accordance with the requirements of Guide Section 17.18.
  • See Guide Exhibit 19 for details on these fees and all other applicable fees or visit Exhibit 19 [PDF 183K].
Special Delivery Requirements
  • You must deliver all mortgage data required by Form 11 or Form 13SF, as applicable.
Single-Family Seller/Servicer Guide
  • Refer to Guide Section 24.6 and 24.7.

 

Download a Cash-out Refinance Mortgage fact sheet [PDF 106K] for more details.

Lender Benefits

Cash-out refinance mortgages help you:

  • Meet the needs of more refinance borrowers looking to leverage their home equity for a variety of purposes.
  • Improve efficiencies using Loan Prospector technology.
  • Retain more of your customer base in refinance markets.
  • Meet the needs of borrowers with special circumstances using the special purpose cash-out refinance option.

Benefits for Your Borrowers

Cash-out refinance mortgages help your borrowers:

  • Receive cash out to consolidate debt or for any other purpose.
  • Pay off junior liens, including HELOCs. Pay off a purchase money junior lien or a leasehold interest, pay for home improvements or buy out the equity of an ex-spouse, joint heir or joint devisee.
  • Eliminate upfront costs by rolling all closing costs, financing costs and prepaid items into the new loan amount.

For More Information

Training Opportunities

Visit The Learning Center for live and recorded web conferences, access to classroom-style workshops and self-study tools – all designed to help you stay competitive, serve more borrowers and make it easier to do business with us.

The information in this document is not a replacement or substitute for information found in the Single-Family Seller/Servicer Guide and/or the terms of your Master Agreement and/or Master Commitment.


© 2008 Freddie Mac