Mitchell6024/quickb · Datasets at Hugging Face

id stringlengths 36 36	text stringlengths 1 400	source stringclasses 1 value
028eaa36-77e7-4822-8c79-b3c7ae2eee58	Other Types of Income, continued A borrower in receipt of VA Pension or Disability benefits with Aid and Attendance should be discussed with the VA Pension Service, VA Compensation Service, or the VA Hospital where the property is located, to determine if the income is likely to continue for the foreseeable future.	VA_Guidelines.txt
3bdf09ab-bef8-4faa-8006-5a51e2e95130	If a borrower has a contract for employment in a foreign country (whether or not the employer is a US company or corporation), the income can be used if it is verified, stable, and reliable. While some contracts are renewed yearly, consider the borrower’s past employment history and the likelihood of the contract being extended.	VA_Guidelines.txt
36163bfd-cb70-463f-895d-8b1b65688ad8	Income that is paid by a foreign employer or government in foreign currency should be converted to US dollars. 4-21 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 3: Income Taxes and Other Deductions Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.	VA_Guidelines.txt
6baffbdb-2fba-4281-bafa-09a15dc67caf	Income Tax and Social Security Deductions Determine the appropriate deductions for Federal income tax and Social Security using the “Employer’s Tax Guide”, Circular E, issued by the Internal Revenue Service (IRS). Determine the appropriate deductions for state and local taxes using similar materials provided by the states.	VA_Guidelines.txt
4de61d14-6959-4885-8609-070b60476da3	The income tax should be based upon the borrower’s residence and what is documented in the guide to the IRS, and not solely the amount claimed on the paystub. An active-duty servicemember’s LES may have a different state tax deduction than the state where the active-duty servicemember will be purchasing a residence or refinancing.	VA_Guidelines.txt
6a1d61e8-6d40-44fa-b9f8-9eb42921bad4	Select the state listed on the LES for the state taxes to be considered in state tax deductions. The lender may consider the borrower’s potential tax benefits from obtaining the loan (for example, mortgage interest deduction) in the analysis.	VA_Guidelines.txt
8fc10161-c09a-4ea8-bdbb-4b1e7d360fcd	To do so: · determine what the borrower’s withholding allowance will be, using the instructions and worksheet portion of IRS Form W-4, Employee’s Withholding Allowance Certificate, and · apply that withholding number when calculating Federal and state income tax deductions on VA Form 26-6393, Loan Analysis, then · document the change in deductions in Item 47, Remarks, on VA Form 26-6393, Loan	VA_Guidelines.txt
2f98671e-6e24-4ace-9b2a-6c793f8f805e	in Item 47, Remarks, on VA Form 26-6393, Loan Analysis	VA_Guidelines.txt
b5251980-d456-4b1b-8f83-f06c45079c9e	. b.	VA_Guidelines.txt
f206425d-3bf4-4685-83f9-570868ae88e9	Income Tax Credits from Mortgage Credit Certificates (MCC) MCCs issued by state and local governments may qualify a borrower for a Federal tax credit. The Federal tax credit is based on a certain percentage of the borrower’s mortgage interest payment.	VA_Guidelines.txt
7c5fb006-47da-4707-b587-9fea0422c6f8	Lenders must provide a copy of the MCC to VA with the loan package which indicates: · documentation verifying any expenses charged by the local government entity for the program which is listed on the Closing Disclosure Statement, and the percentage to be used to calculate the tax credit, and if applicable, the amount of the indebtedness.	VA_Guidelines.txt
707d90f9-c10a-4b60-8977-5d775aac499c	The certified indebtedness can be comprised of a loan incurred by the borrower to acquire a principal residence or a qualified home improvement rehabilitation loan. There is an IRS annual limit on the tax credit equal to the lesser of the borrower’s maximum tax liability or $2,000. Calculate the tax credit by applying the specified percentage to the interest paid on the certified indebtedness.	VA_Guidelines.txt
167e849d-c8ea-456b-8aa9-882ae12de02c	Then apply the annual limit. Continued on next page 4-22 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 3: Income Taxes and Other Deductions Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.	VA_Guidelines.txt
7c8da8f5-8d75-49b9-b6a8-dc601bcbb75a	Income Tax and Social Security Deductions Determine the appropriate deductions for Federal income tax and Social Security using the “Employer’s Tax Guide”, Circular E, issued by the Internal Revenue Service (IRS). Determine the appropriate deductions for state and local taxes using similar materials provided by the states.	VA_Guidelines.txt
914767e9-1931-4246-aa47-e6b601d50321	The income tax should be based upon the borrower’s residence and what is documented in the guide to the IRS, and not solely the amount claimed on the paystub. An active-duty servicemember’s LES may have a different state tax deduction than the state where the active-duty servicemember will be purchasing a residence or refinancing.	VA_Guidelines.txt
a22c8755-0e19-43c0-9dd5-4126022183be	Select the state listed on the LES for the state taxes to be considered in state tax deductions. The lender may consider the borrower’s potential tax benefits from obtaining the loan (for example, mortgage interest deduction) in the analysis.	VA_Guidelines.txt
af16154e-7661-4e95-ac86-83e209bd7a42	To do so: · determine what the borrower’s withholding allowance will be, using the instructions and worksheet portion of IRS Form W-4, Employee’s Withholding Allowance Certificate, and · apply that withholding number when calculating Federal and state income tax deductions on VA Form 26-6393, Loan Analysis, then · document the change in deductions in Item 47, Remarks, on VA Form 26-6393, Loan	VA_Guidelines.txt
5190a379-567e-45a9-b40b-04a3c492b908	in Item 47, Remarks, on VA Form 26-6393, Loan Analysis	VA_Guidelines.txt
5275d31a-c7ce-4323-acc0-0c4b066a93e2	. b.	VA_Guidelines.txt
7b60f81b-a1f7-4deb-b9be-bd1b8fabf412	Income Tax Credits from Mortgage Credit Certificates (MCC) MCCs issued by state and local governments may qualify a borrower for a Federal tax credit. The Federal tax credit is based on a certain percentage of the borrower’s mortgage interest payment.	VA_Guidelines.txt
dbf82bed-9fb4-4282-b629-97ebf48a05a8	Lenders must provide a copy of the MCC to VA with the loan package which indicates: · documentation verifying any expenses charged by the local government entity for the program which is listed on the Closing Disclosure Statement, and the percentage to be used to calculate the tax credit, and if applicable, the amount of the indebtedness.	VA_Guidelines.txt
dda37392-1c22-4644-8611-86553601384c	The certified indebtedness can be comprised of a loan incurred by the borrower to acquire a principal residence or a qualified home improvement rehabilitation loan. There is an IRS annual limit on the tax credit equal to the lesser of the borrower’s maximum tax liability or $2,000. Calculate the tax credit by applying the specified percentage to the interest paid on the certified indebtedness.	VA_Guidelines.txt
6574f78a-6e7a-4a44-892b-b9420a241ab3	Then apply the annual limit. Continued on next page 4-22 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 3: Income Taxes and Other Deductions, continued b. Income Tax Credits from Mortgage Credit Certificates (MCC), continued Example: The MCC shows a 30 percent rate and $100,000 certified indebtedness. The borrower will pay approximately $8,000 in annual mortgage interest.	VA_Guidelines.txt
4404654e-3cc3-44c9-923c-9c40f696f556	The borrower’s estimated total Federal income tax liability is $9,000. Calculate the tax credit as follows: Table 2: MCC Calculation Step Procedure 1 30 percent of $8,000 = $2,400 2 Apply the IRS annual $2,000 limit 3 The tax credit will be $2,000 This allows use of $167 (one twelfth of $2,000) as income to qualify the borrower.	VA_Guidelines.txt
1325c61a-56c2-4d79-a6ab-4eacef607567	If the mortgage on which the borrower pays interest is greater than the amount of certified indebtedness, limit the interest used in the tax credit calculation to that portion attributable to the certified indebtedness. Since these programs are offered by state and local government(s), pre- approval by VA is not required for the borrower to participate in the program.	VA_Guidelines.txt
e2b934cd-3b56-4cbe-9b47-51426e15ca9d	The lender is responsible to determine all eligibility requirements are met by the borrower to participate in the program. c. Other Deductions from Income Include any costs for job-related expenses, child care, significant commuting costs, and any other direct or incidental costs associated with the borrower’s or spouse’s employment.	VA_Guidelines.txt
90d2fb62-0ca8-4ffb-adef-b046cf8fee56	For children up to the age of 12 years, the lender is responsible for determining if there are any child care expenses for the borrower(s). 4-23 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 4: Assets and Closing Requirements Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.	VA_Guidelines.txt
a72cb655-91a0-4157-810e-8db504da67ff	Assets and Amount of Cash Required for Closing The borrower(s) must have sufficient cash assets to cover: · any closing costs, pre-paids, or discount points which are the borrower’s responsibility and are not financed into the loan, and · the difference between the sales price and the loan amount, if the sales price exceeds the reasonable value established by VA (i.e. negative equity).	VA_Guidelines.txt
fc8fdf15-6cda-454e-9e10-5990a4d8381f	VA does not require the borrower(s) to have additional cash to cover a certain number of mortgage payments, unplanned expenses or other contingencies on the residence, or refinance of the Veteran’s residence. However, the borrower’s ability to accumulate liquid assets and the current availability of liquid assets for unplanned expenses should be considered in the overall credit analysis.	VA_Guidelines.txt
f482df9f-f4ca-410a-99ef-9e3e14802d33	Reserves are required for borrowers using rental income to qualify. See Topic 2, subsection n of this chapter for more information. A rental offset does not require additional assets to cover PITI. See Topic 2, subsection n of this chapter for more information.	VA_Guidelines.txt
d1ab9667-88b3-441f-b777-a8e9db30d552	The assets securing a loan(s) against deposited funds (signature loans, cash value life insurance policies, 401(k) loans, other) may not be included as an asset on the VA Form 26- 6393, Loan Analysis. See Topic 5 of this chapter for more information. b.	VA_Guidelines.txt
0581c8ae-c5af-4d30-8b9b-39dfa2bb3813	Verification of Assets and Cash to Close Requirements Verify all liquid assets owned by the borrower(s) to the extent they are needed to close the loan. In addition, verify any liquid assets that may have a bearing on the overall credit analysis (significant assets).	VA_Guidelines.txt
15625537-6568-434d-9044-f8620bffd611	Use VA Form 26-8497a, Request for Verification of Deposit, or electronic, or certified copies of the borrower’s last two bank statements. Verifications must be no more 120 days old (180 days for new construction). For automatically closed loans, this means the date of the deposit verification is within 120 days of the date the note is signed (180 days for new construction).	VA_Guidelines.txt
e6809d0c-b233-4969-9ca0-2aa9288a5066	For prior approval loans, this means the date of the deposit verification is within 120 days of the date the application is received by VA (180 days for new construction). Continued on next page 4-24 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 4: Assets and Closing Requirements, continued c.	VA_Guidelines.txt
cc35dbb0-7bdb-4f34-b22d-a97a04a84b03	Pending Sale of Real Estate In some cases, the determination that the income and/or assets of borrowers are needed to qualify for the loan depends upon the sale of presently the borrower’s owned real property.	VA_Guidelines.txt
f9916d84-e7c1-4f1d-a59f-17e216183b50	The sale proceeds may be necessary to: · clear the outstanding mortgage(s) against the property, · pay outstanding consumer obligations, · make a downpayment or pay closing costs on the VA loan, and/or · restore previously used VA entitlement. Evidence the sale has been completed should be included in the closing package to verify proceeds from the sale.	VA_Guidelines.txt
5cce0fc1-34bc-4ac0-bd81-3a9e698f0658	As an alternative, the Veteran may sell the property with the buyer assuming the outstanding mortgage obligation. See Chapter 6 of this handbook for assumptions (Release of Liability) with a Substitution of Entitlement to restore previously used entitlement. See Chapter 5 of this handbook for prior approval loans, which depend upon the sale of property for the borrower to qualify.	VA_Guidelines.txt
e90c3048-3e8c-4c25-b007-e72b4a17c15a	See Chapter 5 of this handbook for all required loan closing documents. d. Gift Funds A gift can be provided by a donor that does not have any affiliation with the builder, developer, real estate agent, or any other interested party to the transaction.	VA_Guidelines.txt
75af0bf5-2ed3-4cf1-aec7-e06d40d454f0	A gift letter must: · specify the dollar amount of the gift, · include the donor’s statement that no repayment is expected, and · indicate the donor’s name, address, telephone number, and relationship to the borrower.	VA_Guidelines.txt
215a890f-66cd-45fe-beb2-9308016beacf	The lender must verify that sufficient funds to cover the gift have been transferred to the borrower’s account, or will be documented as received by the closing agent at the time of closing.	VA_Guidelines.txt
76b4f96b-04a2-46bb-b3e1-495f484e8932	Acceptable documentation includes the following: · evidence of the borrower’s deposit, · a copy of the donor’s funds by check/electronic transfer to the closing agent, or · the CD showing receipt of the donor’s funds. 4-25 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 5: Debts and Obligations Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.	VA_Guidelines.txt
ef28eff9-d109-4943-8942-0431ef775fae	Verification Requirements for Debts and Obligations All debts and obligations of the borrowers’ must be verified and rated. Obtain a credit report with all information for all credit bureaus. See Topic 7, subsection a of this chapter for details on the type of credit report required.	VA_Guidelines.txt
13fa5543-404a-4b87-a550-077edd654083	For obligations not included on the credit report which are revealed on the application or through other means, the lender must obtain a verification of payment history showing the obligation or other written verification directly from the creditor, including the payment amount and outstanding balance.	VA_Guidelines.txt
57fa90bb-c335-43fb-986d-760183d14007	The lender must also separately verify accounts listed as “will rate by mail only” or “need written authorization.” When a pay stub(s) or LES indicates an allotment, the lender must investigate the nature of the allotment to determine whether the allotment is related to a debt or other obligation(s). Examples may include 401K obligation or repayment, child care, child support, or other.	VA_Guidelines.txt
d54fd894-1c65-4432-bb04-a59ca02f1bb2	For obligations that have not been rated on the credit report or elsewhere, obtain the verification and rating directly from the creditor. Include a written explanation for any obligation that is not rated. Resolve all discrepancies prior to closing.	VA_Guidelines.txt
0ee048c9-6e48-4faf-a2f3-4cd9daaee69f	Resolve all discrepancies prior to closing. If the credit report, deposit verification, bank statement, or pay stub(s) reveals any debts or obligations which were not divulged by the borrowers): · obtain clarification as to the status of such debts from the borrower(s), then · verify any remaining discrepancies with the creditor.	VA_Guidelines.txt
c60a3e4d-b4e3-4bbf-be16-6fc4779d7855	Credit reports and verifications must be no more than 120 days old (180 days for new construction). For automatically closed loans, this means the date of the credit report or verification is within 120 days of the date the note is signed (180 days for new construction).	VA_Guidelines.txt
87558bde-31c4-47d8-8ed1-c7993ac62fd1	For prior approval loans, this means the date of the credit report or verification is within 120 days of the date the application is received by VA (180 days for new construction).	VA_Guidelines.txt
d2e4e27b-9076-4b39-954c-cb310e746f75	ECOA prohibits requests for, or consideration of, credit history and liability information of a spouse who will not be contractually obligated on the loan, except: · if the borrower(s) is relying on alimony, child support, or maintenance payments from the spouse (or former spouse), or · in community property states.	VA_Guidelines.txt
19ca5f9d-4a12-481c-bc41-d868ef5363c9	Continued on next page 4-26 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 5: Debts and Obligations, continued a.	VA_Guidelines.txt
0f82bb4c-2f43-4d09-8310-0386927dea19	Verification Requirements for Debts and Obligations, continued If either of these situations is applicable, the lender must: · Obtain a credit report on the non-purchasing spouse in addition to the Veteran’s credit report. · Consider the spouse’s credit history in reaching a determination.	VA_Guidelines.txt
ecb5a699-4a95-464d-a468-53dd987f98a2	A Veteran borrower with a satisfactory credit history may be considered a satisfactory risk even though the non-purchasing spouse’s credit may be unsatisfactory. · Include the monthly payment of the non-purchasing spouse’s debts on the VA Form 26- 6393, Loan Analysis.	VA_Guidelines.txt
790a8e02-8298-4180-ab58-bb63d20e9321	For debts such as judgments and unpaid collection accounts, lenders should consider the Veteran’s capacity to address the debt(s)	VA_Guidelines.txt
2bb9293a-50ab-44ac-b1da-02e15e33723c	. · Develop the facts surrounding any unsatisfied judgments on the spouse’s credit report, such as where the judgment was filed and whether the parties were married to one another at the time, and secure a competent legal opinion whether the judgment may become a lien against the property	VA_Guidelines.txt
e4d5d087-0801-4ca1-b7e3-92021fb02bae	. · Exclude the monthly payment on the spouse’s debts from the loan analysis when a reliable source of income for the spouse is verified to reach such a conclusion which is voluntarily provided. · Document VA Form 26-6393, Loan Analysis, with an explanation of facts and determination when concluding credit worthiness of the Veteran or excluding obligations of the non- purchasing spouse. b.	VA_Guidelines.txt
b3efad72-6c6f-4444-b2c2-309810f85efd	Verification of Alimony and Child Support Obligations The payment amount of any alimony and/or child support obligation of the borrower must be verified. Do not request documentation of a borrower’s divorce unless it is necessary to verify the amount of any alimony or child support liability indicated by the borrower.	VA_Guidelines.txt
131f3804-b79c-4249-9df5-65f1e3cf1b45	If, however, in the routine course of processing the loan, the lender encounters direct evidence (such as, in the credit report) that a child support or alimony obligation exists, they should make any inquiries necessary to resolve discrepancies and obtain the appropriate verification. Spousal support may be treated as a reduction in income on VA Form 26-6393, Loan Analysis.	VA_Guidelines.txt
2b558b3e-1b59-442f-a410-3e67b39d4d70	Child support payment is treated as a liability on VA Form 26-6393, Loan Analysis. Continued on next page 4-27 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 5: Debts and Obligations, continued c.	VA_Guidelines.txt
068615a9-f5ea-4d14-b76c-6038ef54d39b	Analysis of Debts and Obligations Significant debts and obligations include: · debts and obligations with a remaining term of 10 months or more; that is, long-term obligations, and · accounts with a term of less than 10 months that require payments so large as to cause a severe impact on the family’s resources for any period of time.	VA_Guidelines.txt
ba858aa1-df65-41d0-ae59-77e46d1b619f	Example: Monthly payments of $300 on an auto loan or lease with a remaining balance of $1,500, even though it should be paid out in 5 months, would be considered significant. The payment amount is so large as to cause a severe impact on the family’s resources during the first, most critical, months of the home loan.	VA_Guidelines.txt
5eb2290f-03c4-49da-bb27-e98d6cb26cbc	Determine whether debts and obligations which do not fit the description of “significant” should be given any weight in the analysis. They may have an impact on the borrower’s ability to provide for family living expenses.	VA_Guidelines.txt
fcdc50c8-863e-4bbd-ba38-a07dc562b951	If a married Veteran wants to obtain the loan in his or her name only, the Veteran may do so without regard to the spouse’s debts and obligations in a non-community property state. However, in community property states, the spouse’s debts and obligations must be considered even if the Veteran wishes to obtain the loan in his or her name only. See Topic 2, subsection c of this chapter.	VA_Guidelines.txt
a1edee27-f735-46bd-99ee-58aa5584ca4a	See Topic 2, subsection c of this chapter. Debts assigned to an ex-spouse by a divorce decree will not generally be charged against a borrower. This includes debts that are now delinquent. d. Borrower as Co-obligor/Co-Signor on a Loan or Obligation The borrower(s) may have a contingent liability based on co-signing a loan.	VA_Guidelines.txt
a0036bd5-fbf9-4f71-8c7c-49d67cef3190	The lender may exclude the loan payments from the monthly obligations factored into the net effective income calculation in the loan analysis if: · there is evidence that the loan payments are being made by someone else and the obligation is current, and · there is not a reason to believe that the borrower will have to participate in repayment of the loan. e.	VA_Guidelines.txt
07ca93bf-ab91-46db-bd46-1734bed7207b	Pending Sale of Real Estate A borrower(s) may have a current home and the sale of the real property is needed to complete the transaction.	VA_Guidelines.txt
190bed09-15de-4293-8256-aa8d89a14d4f	The lender may disregard the payments on the outstanding mortgage(s) and any consumer obligations which the Veteran intends to clear if available information provides a reasonable basis for concluding the equity to be realized from the sale will be sufficient for this purpose. See Topic 4, subsection c of this chapter for necessary documents.	VA_Guidelines.txt
a12918f3-64ca-4d86-810a-a4efd94707bc	Continued on next page 4-28 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 5: Debts and Obligations, continued f. Secondary Borrowing If the borrower(s) plans to obtain a second mortgage simultaneously with the VA-guaranteed loan, include the second mortgage payment as a significant debt.	VA_Guidelines.txt
a2dff1b1-0603-4d74-9ab3-b37837a064c6	From an underwriting standpoint, the Veteran must not be placed in a substantially worse position than if the entire amount borrowed had been guaranteed by VA. See Chapter 9 of this handbook for VA limitations on secondary borrowing.	VA_Guidelines.txt
faf614a8-b14d-4583-8623-1735c9144f9b	If the borrower(s) provides written evidence that the student loan debt will be deferred at least 12 months beyond the date of closing, a monthly payment does not need to VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 5: Debts and Obligations, continued h.	VA_Guidelines.txt
b4bc4764-8fad-415b-a33a-1190e1763134	Open 30-Day Charge Accounts An open 30-day charge account is defined as an account in which the borrower(s) must pay off the outstanding balance on the account every month.	VA_Guidelines.txt
c9cd543f-e36c-4f84-ab51-0006f9f6e3b2	For open 30-day charge accounts, determine if the borrower(s) pays the balance in full each month, and has verified funds to cover the account balance in addition to any funds required for closing costs. · If there are sufficient funds, the payment does not need to be included in Section D of the VA Form 26-6393, Loan Analysis, but the obligation should continue to be listed	VA_Guidelines.txt
084e0c7d-0542-4cfe-972e-ef5a65bca0e1	. · If there are not sufficient funds, a minimum payment of 5 percent of the balance should be considered included in Section D of the VA Form 26-6393, Loan Analysis. 4-30 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 6: Debts Owed to the Federal Government Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.	VA_Guidelines.txt
383abeee-7220-4011-bc52-80653266aa61	Title Search Requirements The lender is responsible for obtaining the necessary title search to ensure there are no encumbrances that would preclude the borrower from obtaining a loan. b. VA Form 26-8937, Verification of Benefits The lender is responsible for obtaining the necessary title search to ensure there are no encumbrances that would preclude the borrower from obtaining a loan.	VA_Guidelines.txt
749496fa-2a7d-464d-9d00-7bd2e385d55f	Generally, VA Form 26-8937, Verification of VA Benefits, is not needed unless the COE or new IRRRL case number indicates to submit the form to VA before closing.	VA_Guidelines.txt
35463779-4865-450a-af38-ef296e4e8abd	However, ask the Veteran and any Veteran co-obligors (including spouse if a Veteran) if he or she: · will be discharging within the next 6 months from the military and has completed a PEB or MEB and will be filing for VA disability while still on active duty, · has recently filed for VA disability and compensation, or VA pension, and VA has not yet made a determination, · would be entitled to	VA_Guidelines.txt
37fa9255-b4ec-4b28-91c2-25c177fa568b	yet made a determination, · would be entitled to receive VA disability benefits, but in receipt of retirement pay, · has received VA disability benefits in the past, or · is an unmarried surviving spouse of a Veteran (has applied and/or in receipt of DIC who died on active duty or as a result of a · service-connected disability	VA_Guidelines.txt
0d775641-5172-4a6d-be34-9fd3566c2741	.	VA_Guidelines.txt
835dcb27-709d-4599-a67d-8c8c344d1842	If the Veteran falls under one of the above categories, follow the procedures discussed in Topic 2, subsection m of this chapter.	VA_Guidelines.txt
2fba7150-1ddb-4f3f-bc7c-2cb74ffd30e7	When VA returns the form to the lender and the form indicates that the borrower has any of the following: · an outstanding indebtedness of VA overpaid education, compensation, or pension benefits, · an education or direct home loan in default, · an outstanding indebtedness resulting from payment of a claim on a prior VA home loan, or · a repayment plan for any of these debts that is current, Then	VA_Guidelines.txt
ca30f8b4-d8c9-4d41-b233-4bc3f5742fee	plan for any of these debts that is current, Then one of the following must accompany the loan package: · evidence of payment in full of the debt, or · evidence of a current payment plan acceptable to VA and evidence that the Veteran executed a promissory note for the entire debt balance	VA_Guidelines.txt
99773390-fd55-448e-b3cf-1c180090cae0	.	VA_Guidelines.txt
c8571d52-b58b-4cea-9d61-95bfd7abcb22	Continued on next page 4-31 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 6: Debts Owed to the Federal Government, continued b.	VA_Guidelines.txt
8eb71cf5-d7c6-4c71-87ea-3a4b44f8bee6	VA Form 26-8937, Verification of Benefits, continued VA may find a repayment plan acceptable if: · the Veteran has been satisfactorily making payments on a repayment plan in effect prior to the lender’s inquiry, · the Veteran’s overall credit history and anticipated financial capacity after the proposed loan is made indicate a reasonable likelihood that the repayment plan will be honored and the	VA_Guidelines.txt
b5c94b10-9310-4330-b252-006b7e2c3484	that the repayment plan will be honored and the outstanding amount of indebtedness is not so large that it would prevent payment in full, within a reasonable period (approximately 1 year), or · the case involves unusually meritorious circumstances	VA_Guidelines.txt
3902c060-b994-4582-8311-76fb559b11d5	.	VA_Guidelines.txt
51a4cc58-e8ef-48ec-96a4-f3e40b79272d	Examples Consideration would be given to a Veteran with an outstanding/excellent credit history and adequate income whose debt balance is too large to be reasonably paid out in less than 18 months to 2 years. VA will offer special consideration to a Veteran’s claim that he or she was not previously aware of an overpayment of benefits. c.	VA_Guidelines.txt
e21212f4-7700-4dd4-8708-4c771111b1dd	What is the Credit Alert Verification Reporting System (CAIVRS) CAIVRS is a Department of Housing and Urban Development (HUD) maintained computer information system which enables participating lenders to learn when a borrower has previously defaulted on a federally-assisted loan.	VA_Guidelines.txt
5f4b2682-13af-40d4-981c-156ea41f2753	More information can be found at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/caivrs The database includes default information from the Department of Agriculture, Department of Education, Department of Justice, HUD, Small Business Administration, Federal Deposit Insurance Corporation, and VA.	VA_Guidelines.txt
98c210b9-908c-447d-a7b1-deef4f9c6fdc	The VA default information included in the database relates to: · overpayments on education cases, · overpayments on disability benefits income, and · claims paid due to home loan foreclosures which resulted in a debt of the government (Generally type 2 VA loans).	VA_Guidelines.txt
ed98c817-5dc4-4193-94f8-0a1cabb190ae	CAIVRS Procedures A CAIVRS inquiry must be performed for all borrowers and co-borrowers (Veteran or non- Veteran) on all VA loans, including IRRRLs. The one exception to this policy is that CAIVRS is not required for non-purchasing spouses in community property states.	VA_Guidelines.txt
e0de5c63-421a-4260-a80b-351234908de9	VA assigns a 10-digit VA lender identification number (ID) to each new lender, then automatically forwards the ID number to HUD with a request to grant the lender CAIVRS access. The lender can begin accessing CAIVRS usually between 7 to 10 business days after receiving its VA ID number assignment.	VA_Guidelines.txt
f979a869-40d8-4c76-a2ad-b76318921736	Continued on next page 4-32 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 6: Debts Owed to the Federal Government, continued c. What is the Credit Alert Verification Reporting System (CAIVRS), continued To register for CAIVRS access for first time users, please use the following link: https://entp.hud.gov/idapp/html/f57register.cfm.	VA_Guidelines.txt
3b4b6316-5f87-4496-9728-05dc5f0b0c1f	Please direct questions concerning problems encountered with accessing CAIVRS to caivrs_admin@hud.gov. If the borrower(s) is found to have a delinquent federal debt through CAIVRS, the validity and delinquency status of the debt should be verified by contacting the creditor agency using the contact phone number and case number reflected on the borrower’s CAIVRS report.	VA_Guidelines.txt
e8319f50-88e4-4f7a-8c02-40eef2935577	The creditor agency that is owed the debt can verify that the debt has been resolved. Documentation should be included in the loan file and an explanation must be provided on VA Form 26-6393, Loan Analysis. It is not necessary for CAIVRS to update the number if documentation is included in the loan file.	VA_Guidelines.txt
12bedf6e-3eaf-4301-a316-ad25d11a5adf	Once screening is complete, enter the CAIVRS confirmation code on VA Form 26-6393, Loan Analysis, in the space to the right of the “no” block in item 46 for purchase and refinances. For IRRRLs, enter the code on VA Form 26-8923, IRRRL Worksheet, in the Notes section. d.	VA_Guidelines.txt
a0cf27df-84b3-40e3-a7d4-32f99082d3b2	Borrower with Presently Delinquent Federal Debts When CAIVRS or another source indicates that the borrower has a delinquent Federal debt, the following steps must be taken: · Suspend processing of the loan application to determine the reason for the non “A” number	VA_Guidelines.txt
05f236df-a5ee-4d1f-a45a-24f8c8bd862c	. · Give full consideration to the CAIVRS information, and any subsequent clarifying information or documentation provided, in applying VA credit standards.	VA_Guidelines.txt
521d5fa1-1d27-481c-906c-188a91bcde7d	Any non “A” number received does not automatically disqualify a Veteran from using their home loan benefit; however, the lender must document and justify the approval.	VA_Guidelines.txt
0977f9f8-0c3c-4bbd-9ead-66e9de5550b1	See Topic 7, subsection b of this chapter for documentation and explanation requirements. · If a previous VA loan is involved that resulted in a debt to the government (due to foreclosures, short sale, deed in lieu, or other), the borrower may contact the VA Debt Management Center at 1-800-827- 0648 or at dmc.ops@va.gov to make arrangements to repay the debt.	VA_Guidelines.txt
94c49442-7f15-406e-afff-9f0d98bc0a39	Generally, only type 2 VA loans (fifth digit of the VA loan number) result in a debt to VA and are reported. The Veteran’s entitlement cannot be restored until the debt to VA is paid in full. If the fifth digit of the previous loan number is a type 6 VA loan, there is generally a loss to the government and the loss is not reported to CAVIRS.	VA_Guidelines.txt

028eaa36-77e7-4822-8c79-b3c7ae2eee58

Other Types of Income, continued A borrower in receipt of VA Pension or Disability benefits with Aid and Attendance should be discussed with the VA Pension Service, VA Compensation Service, or the VA Hospital where the property is located, to determine if the income is likely to continue for the foreseeable future.

VA_Guidelines.txt

3bdf09ab-bef8-4faa-8006-5a51e2e95130

If a borrower has a contract for employment in a foreign country (whether or not the employer is a US company or corporation), the income can be used if it is verified, stable, and reliable. While some contracts are renewed yearly, consider the borrower’s past employment history and the likelihood of the contract being extended.

VA_Guidelines.txt

36163bfd-cb70-463f-895d-8b1b65688ad8

Income that is paid by a foreign employer or government in foreign currency should be converted to US dollars. 4-21 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 3: Income Taxes and Other Deductions Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.

VA_Guidelines.txt

6baffbdb-2fba-4281-bafa-09a15dc67caf

Income Tax and Social Security Deductions Determine the appropriate deductions for Federal income tax and Social Security using the “Employer’s Tax Guide”, Circular E, issued by the Internal Revenue Service (IRS). Determine the appropriate deductions for state and local taxes using similar materials provided by the states.

VA_Guidelines.txt

4de61d14-6959-4885-8609-070b60476da3

The income tax should be based upon the borrower’s residence and what is documented in the guide to the IRS, and not solely the amount claimed on the paystub. An active-duty servicemember’s LES may have a different state tax deduction than the state where the active-duty servicemember will be purchasing a residence or refinancing.

VA_Guidelines.txt

6a1d61e8-6d40-44fa-b9f8-9eb42921bad4

Select the state listed on the LES for the state taxes to be considered in state tax deductions. The lender may consider the borrower’s potential tax benefits from obtaining the loan (for example, mortgage interest deduction) in the analysis.

VA_Guidelines.txt

8fc10161-c09a-4ea8-bdbb-4b1e7d360fcd

To do so: · determine what the borrower’s withholding allowance will be, using the instructions and worksheet portion of IRS Form W-4, Employee’s Withholding Allowance Certificate, and · apply that withholding number when calculating Federal and state income tax deductions on VA Form 26-6393, Loan Analysis, then · document the change in deductions in Item 47, Remarks, on VA Form 26-6393, Loan

VA_Guidelines.txt

2f98671e-6e24-4ace-9b2a-6c793f8f805e

in Item 47, Remarks, on VA Form 26-6393, Loan Analysis

VA_Guidelines.txt

b5251980-d456-4b1b-8f83-f06c45079c9e

. b.

VA_Guidelines.txt

f206425d-3bf4-4685-83f9-570868ae88e9

Income Tax Credits from Mortgage Credit Certificates (MCC) MCCs issued by state and local governments may qualify a borrower for a Federal tax credit. The Federal tax credit is based on a certain percentage of the borrower’s mortgage interest payment.

VA_Guidelines.txt

7c5fb006-47da-4707-b587-9fea0422c6f8

Lenders must provide a copy of the MCC to VA with the loan package which indicates: · documentation verifying any expenses charged by the local government entity for the program which is listed on the Closing Disclosure Statement, and the percentage to be used to calculate the tax credit, and if applicable, the amount of the indebtedness.

VA_Guidelines.txt

707d90f9-c10a-4b60-8977-5d775aac499c

The certified indebtedness can be comprised of a loan incurred by the borrower to acquire a principal residence or a qualified home improvement rehabilitation loan. There is an IRS annual limit on the tax credit equal to the lesser of the borrower’s maximum tax liability or $2,000. Calculate the tax credit by applying the specified percentage to the interest paid on the certified indebtedness.

VA_Guidelines.txt

167e849d-c8ea-456b-8aa9-882ae12de02c

Then apply the annual limit. Continued on next page 4-22 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 3: Income Taxes and Other Deductions Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.

VA_Guidelines.txt

7c8da8f5-8d75-49b9-b6a8-dc601bcbb75a

Income Tax and Social Security Deductions Determine the appropriate deductions for Federal income tax and Social Security using the “Employer’s Tax Guide”, Circular E, issued by the Internal Revenue Service (IRS). Determine the appropriate deductions for state and local taxes using similar materials provided by the states.

VA_Guidelines.txt

914767e9-1931-4246-aa47-e6b601d50321

The income tax should be based upon the borrower’s residence and what is documented in the guide to the IRS, and not solely the amount claimed on the paystub. An active-duty servicemember’s LES may have a different state tax deduction than the state where the active-duty servicemember will be purchasing a residence or refinancing.

VA_Guidelines.txt

a22c8755-0e19-43c0-9dd5-4126022183be

Select the state listed on the LES for the state taxes to be considered in state tax deductions. The lender may consider the borrower’s potential tax benefits from obtaining the loan (for example, mortgage interest deduction) in the analysis.

VA_Guidelines.txt

af16154e-7661-4e95-ac86-83e209bd7a42

To do so: · determine what the borrower’s withholding allowance will be, using the instructions and worksheet portion of IRS Form W-4, Employee’s Withholding Allowance Certificate, and · apply that withholding number when calculating Federal and state income tax deductions on VA Form 26-6393, Loan Analysis, then · document the change in deductions in Item 47, Remarks, on VA Form 26-6393, Loan

VA_Guidelines.txt

5190a379-567e-45a9-b40b-04a3c492b908

in Item 47, Remarks, on VA Form 26-6393, Loan Analysis

VA_Guidelines.txt

5275d31a-c7ce-4323-acc0-0c4b066a93e2

. b.

VA_Guidelines.txt

7b60f81b-a1f7-4deb-b9be-bd1b8fabf412

Income Tax Credits from Mortgage Credit Certificates (MCC) MCCs issued by state and local governments may qualify a borrower for a Federal tax credit. The Federal tax credit is based on a certain percentage of the borrower’s mortgage interest payment.

VA_Guidelines.txt

dbf82bed-9fb4-4282-b629-97ebf48a05a8

Lenders must provide a copy of the MCC to VA with the loan package which indicates: · documentation verifying any expenses charged by the local government entity for the program which is listed on the Closing Disclosure Statement, and the percentage to be used to calculate the tax credit, and if applicable, the amount of the indebtedness.

VA_Guidelines.txt

dda37392-1c22-4644-8611-86553601384c

The certified indebtedness can be comprised of a loan incurred by the borrower to acquire a principal residence or a qualified home improvement rehabilitation loan. There is an IRS annual limit on the tax credit equal to the lesser of the borrower’s maximum tax liability or $2,000. Calculate the tax credit by applying the specified percentage to the interest paid on the certified indebtedness.

VA_Guidelines.txt

6574f78a-6e7a-4a44-892b-b9420a241ab3

Then apply the annual limit. Continued on next page 4-22 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 3: Income Taxes and Other Deductions, continued b. Income Tax Credits from Mortgage Credit Certificates (MCC), continued Example: The MCC shows a 30 percent rate and $100,000 certified indebtedness. The borrower will pay approximately $8,000 in annual mortgage interest.

VA_Guidelines.txt

4404654e-3cc3-44c9-923c-9c40f696f556

The borrower’s estimated total Federal income tax liability is $9,000. Calculate the tax credit as follows: Table 2: MCC Calculation Step Procedure 1 30 percent of $8,000 = $2,400 2 Apply the IRS annual $2,000 limit 3 The tax credit will be $2,000 This allows use of $167 (one twelfth of $2,000) as income to qualify the borrower.

VA_Guidelines.txt

1325c61a-56c2-4d79-a6ab-4eacef607567

If the mortgage on which the borrower pays interest is greater than the amount of certified indebtedness, limit the interest used in the tax credit calculation to that portion attributable to the certified indebtedness. Since these programs are offered by state and local government(s), pre- approval by VA is not required for the borrower to participate in the program.

VA_Guidelines.txt

e2b934cd-3b56-4cbe-9b47-51426e15ca9d

The lender is responsible to determine all eligibility requirements are met by the borrower to participate in the program. c. Other Deductions from Income Include any costs for job-related expenses, child care, significant commuting costs, and any other direct or incidental costs associated with the borrower’s or spouse’s employment.

VA_Guidelines.txt

90d2fb62-0ca8-4ffb-adef-b046cf8fee56

For children up to the age of 12 years, the lender is responsible for determining if there are any child care expenses for the borrower(s). 4-23 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 4: Assets and Closing Requirements Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.

VA_Guidelines.txt

a72cb655-91a0-4157-810e-8db504da67ff

Assets and Amount of Cash Required for Closing The borrower(s) must have sufficient cash assets to cover: · any closing costs, pre-paids, or discount points which are the borrower’s responsibility and are not financed into the loan, and · the difference between the sales price and the loan amount, if the sales price exceeds the reasonable value established by VA (i.e. negative equity).

VA_Guidelines.txt

fc8fdf15-6cda-454e-9e10-5990a4d8381f

VA does not require the borrower(s) to have additional cash to cover a certain number of mortgage payments, unplanned expenses or other contingencies on the residence, or refinance of the Veteran’s residence. However, the borrower’s ability to accumulate liquid assets and the current availability of liquid assets for unplanned expenses should be considered in the overall credit analysis.

VA_Guidelines.txt

f482df9f-f4ca-410a-99ef-9e3e14802d33

Reserves are required for borrowers using rental income to qualify. See Topic 2, subsection n of this chapter for more information. A rental offset does not require additional assets to cover PITI. See Topic 2, subsection n of this chapter for more information.

VA_Guidelines.txt

d1ab9667-88b3-441f-b777-a8e9db30d552

The assets securing a loan(s) against deposited funds (signature loans, cash value life insurance policies, 401(k) loans, other) may not be included as an asset on the VA Form 26- 6393, Loan Analysis. See Topic 5 of this chapter for more information. b.

VA_Guidelines.txt

0581c8ae-c5af-4d30-8b9b-39dfa2bb3813

Verification of Assets and Cash to Close Requirements Verify all liquid assets owned by the borrower(s) to the extent they are needed to close the loan. In addition, verify any liquid assets that may have a bearing on the overall credit analysis (significant assets).

VA_Guidelines.txt

15625537-6568-434d-9044-f8620bffd611

Use VA Form 26-8497a, Request for Verification of Deposit, or electronic, or certified copies of the borrower’s last two bank statements. Verifications must be no more 120 days old (180 days for new construction). For automatically closed loans, this means the date of the deposit verification is within 120 days of the date the note is signed (180 days for new construction).

VA_Guidelines.txt

e6809d0c-b233-4969-9ca0-2aa9288a5066

For prior approval loans, this means the date of the deposit verification is within 120 days of the date the application is received by VA (180 days for new construction). Continued on next page 4-24 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 4: Assets and Closing Requirements, continued c.

VA_Guidelines.txt

cc35dbb0-7bdb-4f34-b22d-a97a04a84b03

Pending Sale of Real Estate In some cases, the determination that the income and/or assets of borrowers are needed to qualify for the loan depends upon the sale of presently the borrower’s owned real property.

VA_Guidelines.txt

f9916d84-e7c1-4f1d-a59f-17e216183b50

The sale proceeds may be necessary to: · clear the outstanding mortgage(s) against the property, · pay outstanding consumer obligations, · make a downpayment or pay closing costs on the VA loan, and/or · restore previously used VA entitlement. Evidence the sale has been completed should be included in the closing package to verify proceeds from the sale.

VA_Guidelines.txt

5cce0fc1-34bc-4ac0-bd81-3a9e698f0658

As an alternative, the Veteran may sell the property with the buyer assuming the outstanding mortgage obligation. See Chapter 6 of this handbook for assumptions (Release of Liability) with a Substitution of Entitlement to restore previously used entitlement. See Chapter 5 of this handbook for prior approval loans, which depend upon the sale of property for the borrower to qualify.

VA_Guidelines.txt

e90c3048-3e8c-4c25-b007-e72b4a17c15a

See Chapter 5 of this handbook for all required loan closing documents. d. Gift Funds A gift can be provided by a donor that does not have any affiliation with the builder, developer, real estate agent, or any other interested party to the transaction.

VA_Guidelines.txt

75af0bf5-2ed3-4cf1-aec7-e06d40d454f0

A gift letter must: · specify the dollar amount of the gift, · include the donor’s statement that no repayment is expected, and · indicate the donor’s name, address, telephone number, and relationship to the borrower.

VA_Guidelines.txt

215a890f-66cd-45fe-beb2-9308016beacf

The lender must verify that sufficient funds to cover the gift have been transferred to the borrower’s account, or will be documented as received by the closing agent at the time of closing.

VA_Guidelines.txt

76b4f96b-04a2-46bb-b3e1-495f484e8932

Acceptable documentation includes the following: · evidence of the borrower’s deposit, · a copy of the donor’s funds by check/electronic transfer to the closing agent, or · the CD showing receipt of the donor’s funds. 4-25 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 5: Debts and Obligations Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.

VA_Guidelines.txt

ef28eff9-d109-4943-8942-0431ef775fae

Verification Requirements for Debts and Obligations All debts and obligations of the borrowers’ must be verified and rated. Obtain a credit report with all information for all credit bureaus. See Topic 7, subsection a of this chapter for details on the type of credit report required.

VA_Guidelines.txt

13fa5543-404a-4b87-a550-077edd654083

For obligations not included on the credit report which are revealed on the application or through other means, the lender must obtain a verification of payment history showing the obligation or other written verification directly from the creditor, including the payment amount and outstanding balance.

VA_Guidelines.txt

57fa90bb-c335-43fb-986d-760183d14007

The lender must also separately verify accounts listed as “will rate by mail only” or “need written authorization.” When a pay stub(s) or LES indicates an allotment, the lender must investigate the nature of the allotment to determine whether the allotment is related to a debt or other obligation(s). Examples may include 401K obligation or repayment, child care, child support, or other.

VA_Guidelines.txt

d54fd894-1c65-4432-bb04-a59ca02f1bb2

For obligations that have not been rated on the credit report or elsewhere, obtain the verification and rating directly from the creditor. Include a written explanation for any obligation that is not rated. Resolve all discrepancies prior to closing.

VA_Guidelines.txt

0ee048c9-6e48-4faf-a2f3-4cd9daaee69f

Resolve all discrepancies prior to closing. If the credit report, deposit verification, bank statement, or pay stub(s) reveals any debts or obligations which were not divulged by the borrowers): · obtain clarification as to the status of such debts from the borrower(s), then · verify any remaining discrepancies with the creditor.

VA_Guidelines.txt

c60a3e4d-b4e3-4bbf-be16-6fc4779d7855

Credit reports and verifications must be no more than 120 days old (180 days for new construction). For automatically closed loans, this means the date of the credit report or verification is within 120 days of the date the note is signed (180 days for new construction).

VA_Guidelines.txt

87558bde-31c4-47d8-8ed1-c7993ac62fd1

For prior approval loans, this means the date of the credit report or verification is within 120 days of the date the application is received by VA (180 days for new construction).

VA_Guidelines.txt

d2e4e27b-9076-4b39-954c-cb310e746f75

ECOA prohibits requests for, or consideration of, credit history and liability information of a spouse who will not be contractually obligated on the loan, except: · if the borrower(s) is relying on alimony, child support, or maintenance payments from the spouse (or former spouse), or · in community property states.

VA_Guidelines.txt

19ca5f9d-4a12-481c-bc41-d868ef5363c9

Continued on next page 4-26 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 5: Debts and Obligations, continued a.

VA_Guidelines.txt

0f82bb4c-2f43-4d09-8310-0386927dea19

Verification Requirements for Debts and Obligations, continued If either of these situations is applicable, the lender must: · Obtain a credit report on the non-purchasing spouse in addition to the Veteran’s credit report. · Consider the spouse’s credit history in reaching a determination.

VA_Guidelines.txt

ecb5a699-4a95-464d-a468-53dd987f98a2

A Veteran borrower with a satisfactory credit history may be considered a satisfactory risk even though the non-purchasing spouse’s credit may be unsatisfactory. · Include the monthly payment of the non-purchasing spouse’s debts on the VA Form 26- 6393, Loan Analysis.

VA_Guidelines.txt

790a8e02-8298-4180-ab58-bb63d20e9321

For debts such as judgments and unpaid collection accounts, lenders should consider the Veteran’s capacity to address the debt(s)

VA_Guidelines.txt

2bb9293a-50ab-44ac-b1da-02e15e33723c

. · Develop the facts surrounding any unsatisfied judgments on the spouse’s credit report, such as where the judgment was filed and whether the parties were married to one another at the time, and secure a competent legal opinion whether the judgment may become a lien against the property

VA_Guidelines.txt

e4d5d087-0801-4ca1-b7e3-92021fb02bae

. · Exclude the monthly payment on the spouse’s debts from the loan analysis when a reliable source of income for the spouse is verified to reach such a conclusion which is voluntarily provided. · Document VA Form 26-6393, Loan Analysis, with an explanation of facts and determination when concluding credit worthiness of the Veteran or excluding obligations of the non- purchasing spouse. b.

VA_Guidelines.txt

b3efad72-6c6f-4444-b2c2-309810f85efd

Verification of Alimony and Child Support Obligations The payment amount of any alimony and/or child support obligation of the borrower must be verified. Do not request documentation of a borrower’s divorce unless it is necessary to verify the amount of any alimony or child support liability indicated by the borrower.

VA_Guidelines.txt

131f3804-b79c-4249-9df5-65f1e3cf1b45

If, however, in the routine course of processing the loan, the lender encounters direct evidence (such as, in the credit report) that a child support or alimony obligation exists, they should make any inquiries necessary to resolve discrepancies and obtain the appropriate verification. Spousal support may be treated as a reduction in income on VA Form 26-6393, Loan Analysis.

VA_Guidelines.txt

2b558b3e-1b59-442f-a410-3e67b39d4d70

Child support payment is treated as a liability on VA Form 26-6393, Loan Analysis. Continued on next page 4-27 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 5: Debts and Obligations, continued c.

VA_Guidelines.txt

068615a9-f5ea-4d14-b76c-6038ef54d39b

Analysis of Debts and Obligations Significant debts and obligations include: · debts and obligations with a remaining term of 10 months or more; that is, long-term obligations, and · accounts with a term of less than 10 months that require payments so large as to cause a severe impact on the family’s resources for any period of time.

VA_Guidelines.txt

ba858aa1-df65-41d0-ae59-77e46d1b619f

Example: Monthly payments of $300 on an auto loan or lease with a remaining balance of $1,500, even though it should be paid out in 5 months, would be considered significant. The payment amount is so large as to cause a severe impact on the family’s resources during the first, most critical, months of the home loan.

VA_Guidelines.txt

5eb2290f-03c4-49da-bb27-e98d6cb26cbc

Determine whether debts and obligations which do not fit the description of “significant” should be given any weight in the analysis. They may have an impact on the borrower’s ability to provide for family living expenses.

VA_Guidelines.txt

fcdc50c8-863e-4bbd-ba38-a07dc562b951

If a married Veteran wants to obtain the loan in his or her name only, the Veteran may do so without regard to the spouse’s debts and obligations in a non-community property state. However, in community property states, the spouse’s debts and obligations must be considered even if the Veteran wishes to obtain the loan in his or her name only. See Topic 2, subsection c of this chapter.

VA_Guidelines.txt

a1edee27-f735-46bd-99ee-58aa5584ca4a

See Topic 2, subsection c of this chapter. Debts assigned to an ex-spouse by a divorce decree will not generally be charged against a borrower. This includes debts that are now delinquent. d. Borrower as Co-obligor/Co-Signor on a Loan or Obligation The borrower(s) may have a contingent liability based on co-signing a loan.

VA_Guidelines.txt

a0036bd5-fbf9-4f71-8c7c-49d67cef3190

The lender may exclude the loan payments from the monthly obligations factored into the net effective income calculation in the loan analysis if: · there is evidence that the loan payments are being made by someone else and the obligation is current, and · there is not a reason to believe that the borrower will have to participate in repayment of the loan. e.

VA_Guidelines.txt

07ca93bf-ab91-46db-bd46-1734bed7207b

Pending Sale of Real Estate A borrower(s) may have a current home and the sale of the real property is needed to complete the transaction.

VA_Guidelines.txt

190bed09-15de-4293-8256-aa8d89a14d4f

The lender may disregard the payments on the outstanding mortgage(s) and any consumer obligations which the Veteran intends to clear if available information provides a reasonable basis for concluding the equity to be realized from the sale will be sufficient for this purpose. See Topic 4, subsection c of this chapter for necessary documents.

VA_Guidelines.txt

a12918f3-64ca-4d86-810a-a4efd94707bc

Continued on next page 4-28 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 5: Debts and Obligations, continued f. Secondary Borrowing If the borrower(s) plans to obtain a second mortgage simultaneously with the VA-guaranteed loan, include the second mortgage payment as a significant debt.

VA_Guidelines.txt

a2dff1b1-0603-4d74-9ab3-b37837a064c6

From an underwriting standpoint, the Veteran must not be placed in a substantially worse position than if the entire amount borrowed had been guaranteed by VA. See Chapter 9 of this handbook for VA limitations on secondary borrowing.

VA_Guidelines.txt

faf614a8-b14d-4583-8623-1735c9144f9b

If the borrower(s) provides written evidence that the student loan debt will be deferred at least 12 months beyond the date of closing, a monthly payment does not need to VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 5: Debts and Obligations, continued h.

VA_Guidelines.txt

b4bc4764-8fad-415b-a33a-1190e1763134

Open 30-Day Charge Accounts An open 30-day charge account is defined as an account in which the borrower(s) must pay off the outstanding balance on the account every month.

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c9cd543f-e36c-4f84-ab51-0006f9f6e3b2

For open 30-day charge accounts, determine if the borrower(s) pays the balance in full each month, and has verified funds to cover the account balance in addition to any funds required for closing costs. · If there are sufficient funds, the payment does not need to be included in Section D of the VA Form 26-6393, Loan Analysis, but the obligation should continue to be listed

VA_Guidelines.txt

084e0c7d-0542-4cfe-972e-ef5a65bca0e1

. · If there are not sufficient funds, a minimum payment of 5 percent of the balance should be considered included in Section D of the VA Form 26-6393, Loan Analysis. 4-30 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 6: Debts Owed to the Federal Government Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.

VA_Guidelines.txt

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Title Search Requirements The lender is responsible for obtaining the necessary title search to ensure there are no encumbrances that would preclude the borrower from obtaining a loan. b. VA Form 26-8937, Verification of Benefits The lender is responsible for obtaining the necessary title search to ensure there are no encumbrances that would preclude the borrower from obtaining a loan.

VA_Guidelines.txt

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Generally, VA Form 26-8937, Verification of VA Benefits, is not needed unless the COE or new IRRRL case number indicates to submit the form to VA before closing.

VA_Guidelines.txt

35463779-4865-450a-af38-ef296e4e8abd

However, ask the Veteran and any Veteran co-obligors (including spouse if a Veteran) if he or she: · will be discharging within the next 6 months from the military and has completed a PEB or MEB and will be filing for VA disability while still on active duty, · has recently filed for VA disability and compensation, or VA pension, and VA has not yet made a determination, · would be entitled to

VA_Guidelines.txt

37fa9255-b4ec-4b28-91c2-25c177fa568b

yet made a determination, · would be entitled to receive VA disability benefits, but in receipt of retirement pay, · has received VA disability benefits in the past, or · is an unmarried surviving spouse of a Veteran (has applied and/or in receipt of DIC who died on active duty or as a result of a · service-connected disability

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.

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If the Veteran falls under one of the above categories, follow the procedures discussed in Topic 2, subsection m of this chapter.

VA_Guidelines.txt

2fba7150-1ddb-4f3f-bc7c-2cb74ffd30e7

When VA returns the form to the lender and the form indicates that the borrower has any of the following: · an outstanding indebtedness of VA overpaid education, compensation, or pension benefits, · an education or direct home loan in default, · an outstanding indebtedness resulting from payment of a claim on a prior VA home loan, or · a repayment plan for any of these debts that is current, Then

VA_Guidelines.txt

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plan for any of these debts that is current, Then one of the following must accompany the loan package: · evidence of payment in full of the debt, or · evidence of a current payment plan acceptable to VA and evidence that the Veteran executed a promissory note for the entire debt balance

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.

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Continued on next page 4-31 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 6: Debts Owed to the Federal Government, continued b.

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VA Form 26-8937, Verification of Benefits, continued VA may find a repayment plan acceptable if: · the Veteran has been satisfactorily making payments on a repayment plan in effect prior to the lender’s inquiry, · the Veteran’s overall credit history and anticipated financial capacity after the proposed loan is made indicate a reasonable likelihood that the repayment plan will be honored and the

VA_Guidelines.txt

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that the repayment plan will be honored and the outstanding amount of indebtedness is not so large that it would prevent payment in full, within a reasonable period (approximately 1 year), or · the case involves unusually meritorious circumstances

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.

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Examples Consideration would be given to a Veteran with an outstanding/excellent credit history and adequate income whose debt balance is too large to be reasonably paid out in less than 18 months to 2 years. VA will offer special consideration to a Veteran’s claim that he or she was not previously aware of an overpayment of benefits. c.

VA_Guidelines.txt

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What is the Credit Alert Verification Reporting System (CAIVRS) CAIVRS is a Department of Housing and Urban Development (HUD) maintained computer information system which enables participating lenders to learn when a borrower has previously defaulted on a federally-assisted loan.

VA_Guidelines.txt

5f4b2682-13af-40d4-981c-156ea41f2753

More information can be found at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/caivrs The database includes default information from the Department of Agriculture, Department of Education, Department of Justice, HUD, Small Business Administration, Federal Deposit Insurance Corporation, and VA.

VA_Guidelines.txt

98c210b9-908c-447d-a7b1-deef4f9c6fdc

The VA default information included in the database relates to: · overpayments on education cases, · overpayments on disability benefits income, and · claims paid due to home loan foreclosures which resulted in a debt of the government (Generally type 2 VA loans).

VA_Guidelines.txt

ed98c817-5dc4-4193-94f8-0a1cabb190ae

CAIVRS Procedures A CAIVRS inquiry must be performed for all borrowers and co-borrowers (Veteran or non- Veteran) on all VA loans, including IRRRLs. The one exception to this policy is that CAIVRS is not required for non-purchasing spouses in community property states.

VA_Guidelines.txt

e0de5c63-421a-4260-a80b-351234908de9

VA assigns a 10-digit VA lender identification number (ID) to each new lender, then automatically forwards the ID number to HUD with a request to grant the lender CAIVRS access. The lender can begin accessing CAIVRS usually between 7 to 10 business days after receiving its VA ID number assignment.

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Continued on next page 4-32 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 6: Debts Owed to the Federal Government, continued c. What is the Credit Alert Verification Reporting System (CAIVRS), continued To register for CAIVRS access for first time users, please use the following link: https://entp.hud.gov/idapp/html/f57register.cfm.

VA_Guidelines.txt

3b4b6316-5f87-4496-9728-05dc5f0b0c1f

Please direct questions concerning problems encountered with accessing CAIVRS to caivrs_admin@hud.gov. If the borrower(s) is found to have a delinquent federal debt through CAIVRS, the validity and delinquency status of the debt should be verified by contacting the creditor agency using the contact phone number and case number reflected on the borrower’s CAIVRS report.

VA_Guidelines.txt

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The creditor agency that is owed the debt can verify that the debt has been resolved. Documentation should be included in the loan file and an explanation must be provided on VA Form 26-6393, Loan Analysis. It is not necessary for CAIVRS to update the number if documentation is included in the loan file.

VA_Guidelines.txt

12bedf6e-3eaf-4301-a316-ad25d11a5adf

Once screening is complete, enter the CAIVRS confirmation code on VA Form 26-6393, Loan Analysis, in the space to the right of the “no” block in item 46 for purchase and refinances. For IRRRLs, enter the code on VA Form 26-8923, IRRRL Worksheet, in the Notes section. d.

VA_Guidelines.txt

a0cf27df-84b3-40e3-a7d4-32f99082d3b2

Borrower with Presently Delinquent Federal Debts When CAIVRS or another source indicates that the borrower has a delinquent Federal debt, the following steps must be taken: · Suspend processing of the loan application to determine the reason for the non “A” number

VA_Guidelines.txt

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. · Give full consideration to the CAIVRS information, and any subsequent clarifying information or documentation provided, in applying VA credit standards.

VA_Guidelines.txt

521d5fa1-1d27-481c-906c-188a91bcde7d

Any non “A” number received does not automatically disqualify a Veteran from using their home loan benefit; however, the lender must document and justify the approval.

VA_Guidelines.txt

0977f9f8-0c3c-4bbd-9ead-66e9de5550b1

See Topic 7, subsection b of this chapter for documentation and explanation requirements. · If a previous VA loan is involved that resulted in a debt to the government (due to foreclosures, short sale, deed in lieu, or other), the borrower may contact the VA Debt Management Center at 1-800-827- 0648 or at dmc.ops@va.gov to make arrangements to repay the debt.

VA_Guidelines.txt

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Generally, only type 2 VA loans (fifth digit of the VA loan number) result in a debt to VA and are reported. The Veteran’s entitlement cannot be restored until the debt to VA is paid in full. If the fifth digit of the previous loan number is a type 6 VA loan, there is generally a loss to the government and the loss is not reported to CAVIRS.

VA_Guidelines.txt