VA and VA IRRRL Programs

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Partners for the Path Ahead

VA and VA IRRRL Programs

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VA loan programs offer exceptional financing options for active duty military personnel, veterans and their families.

100% financing on purchase and refinance transactions No down payment required on loan amounts ≤ $417,000 High Balance loan amounts up to $1,500,000

No monthly mortgage insurance

No reserves required on 1-unit properties Limitations on fees charged to borrower

Seller allowed to contribute up to 4% of the loan amount for closing costs. Seller is allowed to pay 100% of the discount points and the borrower’s non-recurring closing costs.

Assumable

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Purchase 100% LTV/CLTV

Cash-out refinance up to 100% LTV/115% CLTV 600 minimum credit score

1-4 unit primary residence

Single family residence, PUDs and condominiums in VA approved projects

DTI per DU with ≥ 640 credit score

Gift funds, grants and DPA Funds eligible for closing costs and/or down payment if required

Products:

Fixed rate: 15, 20, 25 and 30 year

ARM: 3/1 and 5/1; Treasury index; 1/1/5 caps; 2.00 margin; qualify at Note rate

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Who is eligible for a VA loan?

Active duty military personnel

Any veteran who served active duty in the Army, Navy, Air Force, Marine Corp or Coast Guard and was discharged under

conditions other than dishonorable

Reservists or National Guard with 6 years of service

Unmarried surviving spouse of an eligible service member who

died as a result of service or serviced-related injuries

VA Program Eligibility

NOTE: VA Circular 26-13-18 announced that the VA will review loans for same-sex married couples for eligibility and loan guaranty benefit. The following information is submitted to the VA RLC:

 Date and name of the state where the marriage occurred,

 The state the borrowers were residing in at the time of the marriage,  State where the subject property is located,

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The VA entitlement is the amount the VA will guaranty the lender

against loss. The entitlement is based on 25% of the total loan amount (including the funding fee, if financed).

The total loan amount, including the funding fee can never exceed

the VA county loan limit without a down payment from the veteran.

The Certificate of Entitlement (COE), issued by the VA, provides the

amount of the veteran’s entitlement.

The entitlement is available for all veterans. The basic

entitlement is $36,000 for loan amounts ≤ $144,000. Bonus entitlement is available for loan amounts > $144,000 up to conforming loan limits.

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The Certificate of Entitlement (COE), issued by the VA, provides

the amount of the veteran’s entitlement.

The entitlement can be affected if the veteran has used it

before and whether or not the entitlement has been restored

There is no limit on the number of times the entitlement

may be used

The entitlement can be restored when a prior VA loan

obtained by the veteran is paid in full, or

An eligible veteran assumes the outstanding loan on a

property and substitutes their entitlement for the same amount originally used on the loan.

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The Certificate of Eligibility can be obtained by going to the VA website at https://vip.vba.va.gov/portal/VBAH/Home and accessing WebLGY.

Sample COE:

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Determining Eligibility

A minimum 25% guaranty is required for all VA loans

The 25% guaranty is based on the lesser of the purchase

price or appraised value

The maximum VA will guaranty is the lesser of the veteran’s

available entitlement or the maximum potential guaranty

Maximum VA Guaranty:

Loan amount ≤ $144,000: maximum $36,000

Loan amount > $144,000 to $417,000: 25% of loan

amount

 Loan amount > $417,000: Lesser of 25% of the VA

county loan limit or the loan amount

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Borrower Eligibility

The following are examples of how to calculate the VA

Guarantee. These examples are not all inclusive:

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Borrower Eligibility  Additional examples:

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Property Eligibility

VA does not have a maximum loan amount however the VA

county loan limits are used to determine the maximum guaranty by county

To view VA’s county loan limits go to VA County Loan Limits

 Counties not identified on the VA loan limit list are limited to

$417,000

HomeBridge limits the maximum loan amount on VA loans to

$1,000,000 excluding Hawaii

Maximum loan amount in Hawaii is $1,500,000

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Property Eligibility

VA loans require a VA funding fee which is paid directly to VA

Funding fee can be financed into the loan amount

Veteran may be exempt from the funding fee; the COE will

identify if veteran is exempt.

 The base loan amount plus the financed funding fee cannot

exceed the conforming loan limit or the VA county limit or a down payment will be required to ensure a 25% guaranty

The funding fee is calculated using the base loan amount

The funding fee can be paid by:

Property seller

Realtor

 Broker

Lender

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Property Eligibility

The funding fee is based on type of service, use and down payment as detailed in the chart below:

VA Funding Fee

(continued)

VA Funding Fee*

Regular Military

Down Payment First Time Use Subsequent Use

None 2.15% 3.30%

≥ 5% (up to 10%) 1.50% 1.50%

> 10% 1.25% 1.25%

Reserves/National Guard

Down Payment First Time Use Subsequent Use

None 2.40% 3.30%

≥ 5% (up to 10%) 1.75% 1.75%

> 10% 1.50% 1.50%

Refinance Transactions

Type of Veteran First Time Use Subsequent User

Regular Military 2.15% 3.30% Reserves/National Guard 2.40% 3.30%

Type of Loan % for All Veterans

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VA has specific requirements regarding fees to the borrower.

VA requirements are:

1% origination fee based on the total loan amount.

Unallowable fees cannot be charged, OR

1 % of the unallowable fees based on the total loan

amount. An origination fee cannot be charged, OR

 1% blend of origination fee and unallowable fees based

on the total loan amount. Combined fees cannot exceed 1% of the total loan amount.

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Per VA, the veteran cannot pay any of the following fees:

Attorney fees (unless the veteran independently retains an

attorney

Pre-payment fees

Real estate broker fees

Termite inspection (allowed on refinance transactions only)

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The following fees are unallowable and cannot be charged to the

veteran if a 1% origination fee is charged:

Fees and Charges

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NOTE: The above list may not be all inclusive.

Refer to the VA Lender’s Handbook 4155 for complete VA requirements.  Lender’s Inspection

 Lender’s Appraisal  Closing/Settlement Fee  Doc Prep Fees

 Conveyance Fee  Underwriting Fee  Pest Inspection Fee  Well/Septic Fee  Escrow Fees  Notary Fee

 Commitment Fee

 Trustee Fee

 Interest Rate Lock Fee  Postage/Mail Charges  Amortization Schedule  Tax Service Fee

 Attorney’s Services other than title work  Loan Application/Processing Fee

 Fees for preparing Truth-in-Lending  Prepayment Penalties (refinance)

 Any other fee not listed as allowable by VA

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The following are allowable closing costs:

Fees and Charges

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 Loan Origination Fee

Reasonable Discount Points

 Appraisal Fee/Compliance Inspection  Credit Report Fee (actual)

 Title Examination/Title Insurance Fees  Recording Fes & Taxes

Prorated Taxes

 Hazard Insurance  Flood Insurance

Flood Determination

Federal Express/Express Mail (Refi only) Closing Protection Letter

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Eligible Property Types:

 1-4 unit primary residence

Townhome/PUD one unit

Project reviews not required

Condo

Must be in a VA approved project

 Site condos require VA Project Approval

Modular

New Construction (completed < 1 year and never occupied)

1 year VA Builder Warranty OR enrolled in a 10 year

protection plan, and

 Construction must be > 95% complete

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Ineligible Property Types:

 Manufactured/mobile homes

Proposed construction

Non-VA approved condo projects

Leasehold properties (unless prior VA approval is obtained)

Properties located within electrical line easements

 Second home and investment property

Properties subject to regular flooding

Rural properties > 10 acres

Properties located in an unacceptable noise zone (e.g. airport)

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Income Eligibility

Owner-occupied primary residence only

VA requires the borrower to certify that they intend to

personally occupy the home as their primary residence.

The borrower(s) must generally occupy the property within 60

days of loan closing

NOTE: Borrowers currently on active duty are not required to meet this

timeframe although the spouse, if not also on active duty would need to occupy the property.

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Calculating Annual Income

 All loans must be run through DU and receive an “Approve/Eligible” or “Refer/Eligible” Finding. “Refer/Eligible” requires a manual underwrite

An “Approve/Eligible” Finding must be downgraded to a manual underwrite when:  The mortgage history has a 1x30 in previous 12 months

Subject loan was previously restructured/modified

– Minimum12 months of 0x30 payments on restructured/modified loan

– Mortgages in default at time of restructure/modification are not eligible

 There are disputed tradelines

– Manual downgrade not required if disputed tradeline meets all of the following:

Disputed account has a zero balance, and

– The disputed account is marked paid in full or resolved, and

– The disputed account is both < $500 and is > 24 months old.

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Appraisal must be performed by a VA appraiser. Appraisals are

ordered through VA.

The Notice of Value (NOV) must be provided to the veteran

within 5 business days of receipt of appraisal.

The NOV must be issued at the appraised value reflected on the

appraisal report.

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Assets are generally not required to be documented.

If assets are required to close the following is required to

indicate sufficient funds:

2 months bank statements or per DU Findings (all pages)

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Minimum 580 credit score regardless of DU Findings

Minimum 600 credit score required on cash-out 90.01% to 100%

LTV

All credit inquiries in the previous 120 days must be addressed and

the result of the inquiry explained.

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 A DTI > 41% requires additional documentation/justification

(compensating factors) unless:

The ratio is > 41% is due solely to the existence of tax-free

income, or

Residual income exceeds the guidelines by at least 20%

 Max DTI 31%/43% with a 580-619 credit score

Max DTI 45% with a 620-639 credit score; > 45% DTI may be

eligible subject to HomeBridge prior approval

Per DU Findings with a ≥ 640 credit score and “Approve/Eligible”

Illinois 2-4 units, New Jersey and New York 3-4 units maximum

45% DTI.

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Excellent credit history

 Conservative use of consumer credit

Minimal consumer debt

 Long-term employment

 Military benefits  High residual income  Low DTI ratio

Compensating Factors

 Significant liquid assets

 Sizable down payment

 The existence of equity in refinance loans  Little or no payment shock

 Satisfactory homeownership experience  Tax credits for child care

 Tax benefits of home ownership

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Employment and Income

A two year employment history is required.

A verbal verification of employment (VVOE) is required within

10 calendar days of loan closing.

A military Leave and Earnings Statement (LES) is required for

active duty military in lieu of a VVOE. The LES must be an

original or certified copy of original. The LES must be no more than 120 days old (180 days for new construction).

A current paystub with YTD of at least one month, and W-2s for

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Escrow/Impound Account

Required on all loans, no exceptions.

Financed Properties

Owner-occupied properties: No limit.

HomeBridge limits its exposure to a maximum of 2 loans

per borrower.

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Gift Funds

Gifts, grants, and down payment assistance programs are eligible per VA guidelines. There must be no expected or implied repayment requirement of the gift funds.

A gift is acceptable if the donor is:

A relative of the borrower.

A government agency or public entity that has a

program providing home ownership.

Gift funds must be evidenced by a gift letter, signed by the

donor.

The gift donor may not be a person/entity with an interest in

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Inspections

A termite inspection is required in all states where termites are

present or when the appraiser has indicated a need for a termite review due to wood-destroying insect damage or an active insect infestation. Refer to VA Department - Local Requirements for additional details.

Well inspections are required in all cases (private or shared).

Septic inspection is required when the appraiser indicated the

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Mortgage/Rental History

0 x 30 in 12 months. A manual downgrade is required for any

mortgage debt with 1 x 30 in 12 months.

Mortgage must be current and due for the month closing.

Verification of Mortgage (VOM) or Verification of Rent (VOR) are

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HomeBridge will accept a Power of Attorney (POA) on VA transactions subject to the following:

General/Military Durable POA acceptable if veteran signed the sales contract and loan application and the veteran’s intention to obtain a VA loan is indicated in the sales contract and/or loan application.  A specific POA is required if both contract and application not

signed by the veteran and must contain the following information:  Clear intention to use their entitlement to obtain the loan Property address

Terms of the loan

Veteran intends to occupy the property as primary residence An Alive and Well statement is required if the veteran is not at closing.

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1-unit property: Not required

2-4 unit property: 6 months PITI

Other rental real estate owned: 3 months PITI for each

additional property owned.

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Residual income is required by VA

NOTE: Residual income requirement can be reduced by 5% if the veteran is on Active Duty.

Residual Income

Loan Amounts ≤ 𝟕𝟕, 𝟕𝟕𝟕

Family Size Northeast Midwest South West

1 $390 $382 $382 $425

2 $654 $641 $641 $713

3 $788 $772 $772 $859

4 $888 $868 $868 $967

5 $921 $902 $902 $1,004

Over 5 Add $75.00 for each additional family member up to 7.

Loan Amounts ≥ 𝟖𝟖, 𝟖𝟖𝟖

Family Size Northeast Midwest South West

1 $450 $441 $441 $491

2 $755 $738 $738 $823

3 $909 $889 $889 $990

4 $1,025 $1,003 $1,003 $1,117

5 $1,062 $1,039 $1,039 $1,158

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EEM (Energy Efficient Mortgage)

MCC (Mortgage Credit Certificates) – Borrower allowed to

do an MCC after closing, but MCC cannot be used to

qualify.

Texas Section 50(a)(6)

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 Cash-out Refinance 90.01 to 100% LTV Requirements

 Maximum loan amount is $417,000 ($625,500 for properties in Alaska/Hawaii or $721,050 in Honolulu county, HI)

 Minimum credit score is 600  30 year fixed loan term only

 Minimum monthly residual income required:

Transactions Types

Family Size Minimum Residual Income

Veteran Only $1,000.00 Veteran +1 $1,500.00 Veteran +2 $2,000.00 Veteran +3 $2,250.00 Veteran +4 $2,500.00 Veteran +5 $3,000.00

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Interest Rate Reduction Refinance Loan (IRRRL) General

Information

An IRRRL is a VA guaranteed loan made to refinance an

existing VA guaranteed loan. The PITI payment on the new

loan must be less than on the existing loan unless one of the

following applies:

The loan term is reduced, or

The veteran is refinancing to a more stable product (i.e.

ARM or GPM to fixed rate

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Highlights of an IRRRL include:

VA to VA refinance

No income

 No assets (unless borrower needs funds to close, then asset

verification required)

No reserves

No ratios

No termite inspection

 No monthly MI

Maximum loan term is the original term of the VA loan being

refinanced plus 10 years. New loan term can never exceed 30 years and 32 days.

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VA IRRRL Program Eligibility

Appraisals

The base loan amount is used to determine appraisal requirement.

An AVM or 2055 is required:

A CoreLogic GeoAVM with a standard deviation ≤ 18 for all loan amounts. If the confidence score is < 18% a 2055 is required, or

Loan amount ≤ $417,000 ProTeck AVM with a confidence score of 80% or more. If the confidence score is < 80% a 2055 is required; > $417,000 requires a confidence score of ≥ 90% or a 2055 is required, or

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VA IRRRL Program Eligibility

(continued)  Assets

Not required unless funds are needed to close.

Documentation is not required if funds needed to close is ≤ $500.00.

AUS

Manual underwrite only.

Cash Back to Borrower

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VA IRRRL Program Eligibility

(continued) (continued)

Credit Report

Conforming Loan Amounts

A mortgage only credit report with credit scores is acceptable unless the PITI payment is increasing by more than 20% or a spouse is being removed from the new loan then a tri-merge credit report is required.

High Balance Loan Amounts

Full credit report to verify no major derogatory credit with the past 12 months. Major derogatory credit is defined as any

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VA IRRRL Program Eligibility

(continued)

(continued) Credit Score

 Minimum 580 required for:

 1-unit credit qualifying conforming and high balance loan amount NOTE: Maximum 90% LTV/CLTV

 Minimum 580 required for:

1-4 units credit qualifying conforming and high balance loan amount

 Minimum 640 required for:

 1-unit non-credit qualifying conforming and high balance loan amounts NOTE: Credit qualifying required:

 < 640 credit score with high balance loan amount

The borrower’s PITI payment will increase by more than 20%  A spouse will be removed from the original loan,

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VA IRRRL Program Eligibility

(continued)

Documentation

 Credit Qualifying

Fully completed 1003

Non-Credit Qualifying

Abbreviated 1003 allowed. Section IV - Employment

Information, Section V - Monthly Income and Combined Housing Expense Information and Section VI - Assets and Liabilities of the 1003 are not required (assets must be included if needed to close the transaction).

All Loans

Legible photo ID and social security card

Most recent mortgage statement

Copy of existing Note

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VA IRRRL Program Eligibility

(continued)

Eligible Borrowers

Veteran or veteran and spouse. Must currently occupy

the property.

A spouse may only be deleted from the new loan if the

loan is credit qualified. Funding Fee

0.50%. The Certificate of Eligibility, issued by VA, will indicate if the veteran is exempt, or non-exempt from paying the VA Funding Fee.

Guaranty

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VA IRRRL Program Eligibility

(continued)

Maximum Loan Amount

Maximum Base Loan Amount ≤ $417,000

Lesser of:

• Existing VA loan pay off - Unpaid principal balance, plus allowable VA closing costs, plus VA funding fee (if

applicable), plus up to 2 discount points, or • The appraised value (AVM or 2055) x 125%.

Maximum Base Loan Amount ≥ $417,001

Lesser of:

• Existing VA loan pay off – Unpaid principal balance, plus allowable VA closing costs, plus VA funding fee (if

applicable), plus up to two discount points, or

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VA IRRRL Program Eligibility

(continued)

Mortgage History/Seasoning

0 x 30 in previous 12 months on loan amounts ≤ $417,000

0 x 30 in previous 24 months for loan amounts ≥ $417,001

($625,500 in Alaska/Hawaii or > $750,000 in Honolulu county, HI). If < 24 months on current mortgage for subject property, prior mortgages may be used to meet the 24 month history requirement. No increase from current housing payment allowed.

Mortgage must be current and due for the month closing.

Borrower must have made a minimum of 12 mortgage

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VA IRRRL Program Eligibility

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Occupancy

1-4 owner-occupied primary residence (2-4 unit ineligible on high balance)

1-unit second home (ineligible on high balance)

1-4 unit investment (ineligible on high balance)

Properties Listed for Sale Within the Previous 12 months

Properties that were listed for sale in the previous 12 months must

be taken off the market prior to the application date.

A property listed for sale will be considered as long as the listing has

been cancelled, expired or withdrawn.

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VA IRRRL Program Eligibility

(continued)

Refinance Transactions

Continuity of obligation requires that at least one of the

borrowers on the refinance transaction is currently on the title of the property being refinanced.

Reserves

Not required.

Subordinate Financing

New loan proceeds cannot be used to pay off any existing

subordinate financing. Existing subordinate financing must subordinate to the new loan.

Figure

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