Product Hatching Ideas

FNMA forgiving Cash Out LLPA with paid in full student loan

Student Loan Cash-out Refinance

With this update, we are introducing the student loan cash-out refinance feature, a cost-effective alternative to use existing home equity to pay off student loan debt. This feature provides the opportunity for borrowers to payoff one or more student loans through the refinance transaction, potentially reducing their monthly debt payments. The loan-level price adjustment that applies to cash-out refinance transactions will be waived when all requirements have been met.

  • Dennis Lollman
  • Apr 27 2017
  • Shipped
Rating BOB-2
Revenue or Retention? Other
Workaround Present No
Impact to Existing Customers All
Customer ID(s) 28sebo01, 39npen01, 30fntr01, 17nbkc01, 17nasb01, 06amsc01, 25fmss01, 05high01
Business Value 2 - Important to a few, minor impact on brand, minor competitive advantage
Urgency 2 - Minimally time constrained
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  • Admin
    Lori Rezac commented
    April 27, 2017 21:39

    We would like to be 1st to market on items like this but we cannot account for all the individual requirements for each of these new types of loans.  One suggestion was to add it as a loan purpose, but there are other items in the backlog that are waiting to be added (see Texas 50(a)(6)).  Ideally we would find a way to be more agile in the addition of offerings such as this.

    Questions to answer and information to gather for further discussion on this topic:

    1. Is Zillow looking in to this new offering?  Matt Anderson will be reaching out to Zillow to gauge where they stand on the topic.

    2. Jessica has sent out emails to investors to determine their level of interest in us supporting this offering.

    3. RC will be gauging interest during his NY trip.

    4. Dennis will be reaching out to customers to determine their level of interest.

    We will reconvene on this topic at the next BOB meeting.

  • Admin
    Lori Rezac commented
    May 4, 2017 15:52

    Comment from Matt Anderson:

    "I spoke with Dillon PM for ZGM and I am going to do some scoping estimates for ZGM revenue and it looks pretty small at this point.  I don’t see us offering this product on custom quotes immediately but may be something we do down the road if interest picks up."

  • Admin
    Lori Rezac commented
    May 11, 2017 13:47

    Per Dennis: "Here is the announcement and more details."

  • Jessica Baker commented
    May 11, 2017 14:54

    Investor response- Most investors aligning eligibility with the attached FNMA announcement, but not waiving cash-out adjustments yet.


    Investors waiving adjustments: Wintrust, M&T, Plaza – stating they will waive cash out adjustments, but no rate sheet changes.

    -Plaza applies the special pricing once an underwriter confirms that the loan qualifies for the waiver. Since we cannot validate this at time of lock or submission, Plaza has elected not to reference the cash out waiver on our rate sheets.


    US Bank - The Fannie Mae student loan cash out offering is not something that we are entertaining at this time. If that changes, we will let you know.


    Flagstar, PennyMac, Caliber, Franklin, Nationwide, Wells, Chase - general consensus - will align with Fannie Mae Bulletin 2017-04 for student loan payment calculations. At this time, we will not offer the Student Loan Cash-out Refinance option.

  • Admin
    Lori Rezac commented
    May 11, 2017 21:26

    There is little opportunity from a revenue standpoint with this offering, according to Matt Anderson.  Those who have implemented have not added it to their rate sheets and is having their underwriter confirm the waiver.  The are aligning with the student loan eligibility mostly.

    Important Note: There is no work around for this what-so-ever.  If we have lenders wanting this, we cannot provide it.

    We should submit a message to our customers detailing our intentions on this product.  Who is going to provide this messaging?

  • Eric Rock commented
    May 25, 2017 20:14

    Mortgage Solutions just sent a bulletin that they are supporting this. From the bulletin it looks like it will be under the cash-out purpose for standard FNMA products. We cannot support this at this time.

  • Dennis Lollman commented
    May 30, 2017 14:42

    Jessica got this from Flagstar:

    So far we have not had many requests for this update. It probably will not have much impact but we are continuing to develop the update in our TEST system. Our plan is to add a new checkbox that is checked if the cashout amount can be categorized as student debt. If the indicator is checked then the standard cashout LLPAs will not apply to the loan. Currently we’re projecting to have this update live near the end of June.





    Gus Burton  Vice President Secondary Marketing Office: (866) 945-9872 5151 Corporate Drive ▪ Troy, MI 48098

  • Jessica Baker commented
    August 9, 2017 20:29

    From: Miraglia, Phillip []
    Sent: Wednesday, August 09, 2017 3:28 PM
    Subject: FW: NE-4762 Student Loan Cash Out Refinance program

     We’re moving forward with offering the FNMA student loan cashout program.  Has there been any movement regarding adding this as a loan purpose? 

    Based on your comments when we met, I understand the technical challenges around adding it, but I can’t imagine that Marksman wouldn’t support something that FNMA offers.



  • Jessica Baker commented
    August 9, 2017 20:30

    Wells and PennyMac both added this 8/7

    PRMG and JMAC just added this as well.

  • Admin
    Lori Rezac commented
    August 18, 2017 16:16

    BOB Meeting Notes:

    • OB is adding this - feature parity
    • We need additional customer feedback to demonstrate business value - Jared will supply.
  • Mike Russell commented
    August 23, 2017 18:07

    06amsc01 would like this product to be able to price in Marksman.  Others to follow.

  • Mike Russell commented
    August 24, 2017 13:34

    30fntr01 is another client who has displayed interest in this product.

  • Jared Nielsen commented
    August 29, 2017 16:55

    More details about this loan program:

    -8.5+ million households could benefit from this program

    -Customers such as SoFi are early adopters and currently offering, matter of time until online marketplaces starting quoting?  

    -Other investors offering the program include Nationwide Corr, Freedom Mortgage

  • Dennis Lollman commented
    August 29, 2017 18:56

    Buenos dias mi compadre . . . 


    I think that on a global basis it would serve you well to provide this option . . .  It is a new program with FNMA so it hasn’t really trickled down to our LO’s yet . . . I haven’t had any inquiries yet and understand that the cash out has to go directly to the student loans which is our problem.. not yours of course.  I believe that it will pick up some steam as more lenders begin to advertise the new program.    Another feather for the quiver….    Do it.




    Richard Bills

    SVP Capital Markets

    Ofc (916) 676-8940

    Fax (949) 468-3969

    HighTechLending Inc.

    7777 Greenback Lane Suite 210

    Citrus Heights, CA 95610

  • Jared Nielsen commented
    August 29, 2017 19:04

    SoFi press release attached.

  • Dennis Lollman commented
    August 29, 2017 19:05

    Here are a couple that think it would be nice, but it's not a priority for them. Dave Mueller at Baird and Warner says "It would be a nice feature, but I'd rather see the tax and insurance escrows separated first".  Erika said if more investors add it, she "can see why this would be a nice exclusion to have."  A few others have that sentiment, such as Mike at United Home Loans, Barbara at Presidential Bank, and Ryan Krell at KS State Bank.

  • Dennis Lollman commented
    August 29, 2017 19:23

    Jamie at First Mortgage Solutions, 25fmss01: 

    I think it would be beneficial to have this as a loan purpose as it would filter out the investors that aren’t allowing the special feature. We’ve originated 2 loans with this feature since it was rolled out by Fannie.

  • Mike Russell commented
    August 29, 2017 20:01

    To add some color the clients I've spoken to about this and showed interest, I've stated we plan on rolling it out in the future and simply trying to gauge interest.  I say it will most likely be a loan purpose as opposed to a product.  Some have actually mentioned LO's are requesting this because is just another tool in their tool belt.  They say it would be great to have but can't really advertise until they have consistent way to price it.