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I have an approved(almost all pre-doc conditions signed off) 6% FHA Rate/Term 95%LTV refinance for a 74 year old borrower in Austin Texas. Borrower currently has a 13.99% limited cashout 30 yr fixed mortgage loan from Beneficial/HSBC closed June 08. The Title Company is saying unless the new mortgage is a "Home Equity Loan", the Title Company will not issue title insurance and is illegal to refinance a home equity loan with a rate and term (Texas 50(a)(6) State Law), regardless of the benefit to the borrower. Due to the loss in property value in the area, the are no Home Equity Loan Programs that would qualify at this High LTV. The borrower will save $800.00 per month with the new FHA Mortgage Loan. Does anyone have any suggestions to overcome or remove this obstacle? Please advise.

savior70 · Posted: Fri Aug 21, 2009 3:34 am Post subject:

Hi,

Texas A6 laws impose certain restrictions on cash-out refinance of your primary residence. The laws allow you to cash out the equity on your home only up to 80% of your home value. The laws also state that if you have an existing home equity loan on your home, it can only be refinanced through another home equity loan, and not by any other type of loan. You are also not allowed to refinance a home equity loan before 12 months from the date of closing. So, I believe what you heard from the title company is right. You will not be able to refinance a home equity loan with a rate and term loan.

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Texas a6 Refi law preventing FHA Refinance for 74 yr old