FHA to Limit Cash-out Refinance Loans

The Federal Housing Administration is taking steps to rein in cash-out refinance loans, as the government looks to reduce its risk exposure. So reports Marketwatch.

The FHA, a division of the Department of Housing and Urban Development, announced on August 1 that, beginning a month later on September 1, it will reduce the amount it allows for cash-out refinances from 85% of a home’s value or less to 80% or less.

Mortgage industry veteran Rick Sharga told MarketWatch that a “lot of the foreclosure activity in the last cycle was caused by people doing cash-out refis.”

Read the full article from MarkeWatch.

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