RECOUP OF FUNDS – PROPERTIES PURCHASED FOR CASH Borrowers who purchased a primary residence or second home for cash will no longer have to wait six months to be eligible for a cash-out refinance. The following documentation requirements and guidelines must be met: • If the purchase was a non-arms length transaction or a bail-out, it would be ineligible for a Recoup of Funds-Cash-Out refinance. • A satisfactory letter of explanation with supporting documentation as to why the property was purchased using cash and the reason they are now seeking to recoup their monies. • Copy of HUD 1 Settlement Statement or Certified Final Closing Statement for the purchase of the subject property which confirms that no mortgage financing was used to obtain the subject property. The preliminary title search or report must also confirm no liens on the subject property. The Closing Statement will be reviewed for anything FLC would consider as a sales concession and any sales concessions will be deducted from the purchase price. • A copy of the sales contract with all counter offers and/or addendums and a copy of the certified escrow instructions to confirm if any personal property was included in the sales price. The sales contract must be reviewed for anything FLC would consider a discrepancy. Any discrepancies/red flags must be addressed. • LTV/TLTV will be based upon the lesser of the purchase price or appraised value, less any personal property that may have been included in the purchase. • Verification of the source of funds used to purchase the subject property must be documented from the borrower’s own funds.(bank statements, HELOC on another property, etc). The source(s) must meet FLC guidelines. • Any loans used as the source for the purchase transaction (i.e. HELOC on another property) will be required to be repaid or paid down with loan proceeds: |
Make it a great day,
Sean K. La Rue
Senior Vice President – Franklin Loan Center
“Your KEY to Moving Home!” – Yo hablo Español
Jumbo Loan Expert | FHA/VA Direct Lender | Reverse Mortgage Advisor
44800 Village Court – Palm Desert, CA 92260
Mobile: 760.835.5663 Office: 760.837.1488 FAX: 800.784.9089
DRE# 01786480 NMLS# 291852
Jan Christensen
Executive Assistant | 760.837.1486 | jchristensen@franklinlc.com
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