Mitchell6024/quickb · Datasets at Hugging Face

id stringlengths 36 36	text stringlengths 1 400	source stringclasses 1 value
f6c51ea1-35e6-4531-a3da-ec0274b659c2	. for self- employed with all line items captured: borrowers (Topic 2 of · signed copies of individual this chapter) tax returns for the most recent 2- year period or tax transcripts, or · individual income information obtained from the IRS via one of the following forms: □ Form 8821 (or an alternate form acceptable to the IRS that collects comparable information) or □ Form 4506 (or an alternate	VA_Guidelines.txt
e5ba0642-ca84-4ace-9020-1c1804d1ca3a	information) or □ Form 4506 (or an alternate form acceptable to the IRS that collects comparable information)	VA_Guidelines.txt
f24a6d41-aa96-4081-bc27-5048a67e75ba	.	VA_Guidelines.txt
77459e55-4cbc-476e-b70f-fb17ba9fca2a	Balance sheets and No balance sheet or YTD Profit No balance sheet or YTD P&L profit and loss and Loss (YTD P&L) is is required. statements for self- required if origination date is employed borrowers < 7 months from the business’ (Topic 2 of this fiscal year end (for which tax chapter). returns or information from the IRS via Form 8821 or Form 4506 were provided)	VA_Guidelines.txt
964b06d6-a4da-42d2-af08-9af8c6f12c84	. 4-46 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 8: Automated Underwriting Cases (AUS), continued e.	VA_Guidelines.txt
fa40db56-5d05-4a99-a390-ab4a6ec9e8f3	Documentation Guidelines for Borrower(s) Self-Employed, continued Table 7: Documentation Guidelines for Borrower(s) who are Self-Employed, continued Subject and Documentation Guidelines Documentation Reductions Reference and Reductions for Refer for Accept/Approve Business tax returns Provide one of the following, No business tax returns are for self-employed with all line items captured:	VA_Guidelines.txt
64a11dc0-948a-4d03-93f6-ac65d3c0b8c3	for self-employed with all line items captured: required if all of the following borrowers (Topic 2 of · Signed copies of business conditions are met: this chapter) tax returns for the most · Borrower proves · recent 2-year period	VA_Guidelines.txt
8e0a37df-e924-4ae0-a3ad-ed44aaacafa3	. ownership of the business Business income for at least the past 5 years. information obtained from · Individual tax returns the IRS via one of the reflect consistent income following forms: for the past 2 years. □ Form 8821 (or an · Funds for downpayment or alternate form closing costs are not from acceptable to the the business.	VA_Guidelines.txt
ef1a40b5-57ed-49c0-97ba-f7cd23685b06	IRS that collects comparable information) or □ Form 4506 (or an alternate form acceptable to the IRS that collects comparable information).	VA_Guidelines.txt
b8261ebe-f672-41a5-b20e-e34e8cb53657	Verify assets to close Provide bank/asset statements Provide bank/asset statements in the borrower’s covering the most recent 2- covering most recent 1- month name (Topic 4 of this month period in lieu of a period in lieu of a VOD. chapter) Verification of Deposit (VOD)	VA_Guidelines.txt
b03d277d-fd76-4201-b45d-5bf115693e2d	. chapter) Verification of Deposit (VOD). 4-47 4-47 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 9: How to Complete VA Form 26-6393 Loan Analysis Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.	VA_Guidelines.txt
46c900b2-de2f-4658-9690-08a4b135c87f	General In order to properly enter information on VA Form 26-6393, Loan Analysis, the underwriter must understand and apply the guidelines provided in the preceding sections of this chapter. b.	VA_Guidelines.txt
30d485ef-9f8b-4319-9d0f-254c6014c6b5	Estimated Monthly Shelter Expense Special instructions are listed in the following table: Table 8: Estimated Monthly Shelter Expenses Item Special Instructions 16 If taxes are expected to increase, use the increased amount. 17 Include the flood insurance premium for properties located in special flood hazard areas. 18 If special assessments are anticipated, use the anticipated amount	VA_Guidelines.txt
1aeba061-a81a-46e7-a5e4-224a6a54375f	. 19 Calculate maintenance and utility costs using 14¢ per square foot for the gross living area as per the appraisal.	VA_Guidelines.txt
373f233f-0be6-4b55-b6a6-21db97c8005f	Example: A 1,500 square foot home with a 1,500 square foot unfished basement would have a combined maintenance and utility cost of $210 (1,500sq X .14). 20 For condominiums or houses in a Planned Unit Development (PUD), include the monthly amount of maintenance assessment payable to the homeowner’s association. c.	VA_Guidelines.txt
77c12645-1b32-4cf7-a047-6b379dbd79dd	Debts and Obligations List all known debts and obligations of the borrower and spouse including any alimony and/or child support payments. Spousal support or alimony may be treated as a reduction in income; however, child support is to be treated as a liability. Place a check mark in the (3) column next to any “significant” debt or obligation.	VA_Guidelines.txt
fd71f3c1-842e-4005-8ea7-278d3fd97f05	See the topic “Analysis of Debts and Obligations” in Topic 4.05c of this chapter, for an explanation of “significant.” Job Related Expense – Section D line 29. Include any costs for child care, significant commuting costs, and any other direct or incidental costs associated with the borrower’s (or spouse’s) employment. Check this item if total job-related expenses are significant.	VA_Guidelines.txt
5e6b733b-dd42-45bc-9596-e5fcdcc92a09	Up to age 12, the lender is responsible for determining if there are any child care expenses for the borrower(s). Continued on next page 4-48 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 9: How to Complete VA Form 26-6393, Loan Analysis, continued d. Federal Income Tax – Item 32 Enter the borrower’s estimated monthly Federal income tax, based upon IRS tax tables.	VA_Guidelines.txt
77608734-78ac-44a9-996a-f02267b1d896	If the borrower has a MCC, reduce the Federal income tax by the estimated tax credit. See Topic 3, subsection b of this chapter for MCC. e. Balance Available for Family Support – Item 43 Enter the appropriate residual income amount from the following tables in the “guideline” box.	VA_Guidelines.txt
5fcd59ec-bf91-4a22-aca6-0d054a31b506	Residual income is the amount of net income remaining (after deduction of debts and obligations and monthly shelter expenses) to cover family living expenses. The numbers are based on data supplied in the Consumer Expenditures Survey (CES) published by the Department of Labor’s Bureau of Labor Statistics. They vary according to loan size, family size, and region of the country. Residual Tables.	VA_Guidelines.txt
050b4dd8-fdd8-464e-b93b-a08aba12f7ea	A key to the geographic regions is listed in the following tables: Table 9: Table of Residual Incomes by Region for Loan Amounts of $79,999 and Below 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 For Family Size Over 5: Add $75 for each additional member up to a family of seven.	VA_Guidelines.txt
2976c396-3004-4bf1-a34c-fde0b4e12db2	Table 10: Table of Residual Incomes by Region for Loan Amounts of $80,000 and Above 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 For Family Size Over 5: Add $80 for each additional member up to a family of seven.	VA_Guidelines.txt
319dffa5-3cf2-4cec-9be4-b1b09ae51bc3	Continued on next page 4-49 4-49 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 9: How to Complete VA Form 26-6393, Loan Analysis, continued e.	VA_Guidelines.txt
1a60ab4d-4fd0-4a69-9719-0ff8b7a61170	Balance Available for Family Support – Item 43, continued Table 11: Key to Geographic Regions Used on the Preceding Tables (Tables 6 and 7) Geographic Region States Northeast Connecticut, Maine, Massachusetts, New Hampshire, Vermont, New Jersey, New York, Pennsylvania, Rhode Island Midwest Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota,	VA_Guidelines.txt
19ee8f5b-eeb9-4804-8778-b61ad03f8669	Nebraska, North Dakota, Ohio, South Dakota, Wisconsin South Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, Texas, Virginia, West Virginia West Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming	VA_Guidelines.txt
0659c3f8-8034-4372-afd8-e8ee5c1d613b	New Mexico, Oregon, Utah, Washington, Wyoming Examples A Veteran has a family size of 3 purchasing a home in Arizona with a loan amount of $400,000	VA_Guidelines.txt
ef1ffe1c-4389-4bd8-bff5-aca585120850	.	VA_Guidelines.txt
915415ac-c892-48a4-9c7d-821a225a2d4d	The residual figure will be $990. A Veteran has a family size of 8 purchasing a home in Georgia with a loan amount of $150,000. The residual figure will be $1,199 (family size of 5 which is $1,039 adding $80 for each additional family member up to a family size of 7). The eighth person will not be considered in the calculation.	VA_Guidelines.txt
60fc01f9-5d8b-4b83-a4a0-afbb09b8acad	Special Instructions Count all members of the household (without regard to the nature of the relationship) when determining “family size,” including: · A borrower’s spouse who is not joining in title or on the note, and · Any other individuals who depend on the borrower for support.	VA_Guidelines.txt
4aa1d009-6143-43f1-b8c3-d4a9b3162121	If a dependent is claimed on the Federal Tax Returns, then the dependent must be considered as a member of the household, to calculate residual income. Examples · Children from a spouse’s prior marriage who are not the borrower’s legal dependents. · A dependent parent.	VA_Guidelines.txt
aa5fb8d1-4cb2-4100-963d-e01153dc5024	Continued on next page 4-50 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 9: How to Complete VA Form 26-6393, Loan Analysis, continued e.	VA_Guidelines.txt
03b25021-581d-4193-9821-3e2828c0eb25	Balance Available for Family Support – Item 43, continued Exceptions for Considering All Members of the Household The lender may omit any individuals from “family size” who are fully supported from a source of verified income which, for whatever reason, is not included in effective income in the loan analysis.	VA_Guidelines.txt
ea852ba5-9590-4990-ad66-bccb64b0b598	Examples · a spouse not obligated on the title or on the note that has stable and reliable income sufficient to support his or her living expenses. · a child for whom sufficient foster care payments or child support is received regularly, or · a parent who has sufficient stable and reliable non-taxable income.	VA_Guidelines.txt
462d8925-35a8-440f-bdcb-a79df5ee7ab1	Reducing the Residual Income Figures Reduce the residual income figure (from the above tables) by five percent if: · the borrower(s) is an active duty or retired serviceperson, or · there is a clear indication that a borrower will receive the benefits resulting from use of military-based facilities located near the property.	VA_Guidelines.txt
f1b0850d-b8c6-4d0e-84e9-22cec0b7e051	Examples include Guard and Reserve military retirees, 100 percent disabled Veterans and their family members, or Medal of Honor recipients. f. Debt-to-Income Ratio – Item 44 VA’s debt-to-income ratio is a ratio of total monthly debt payments (housing expense, installment debts, and other debt) to gross monthly income.	VA_Guidelines.txt
292fe144-02c3-4ba9-b63c-eb778c9c297a	The following steps are required to determine the debt-to-income ratio: Table 12: Steps to Determine the Debt-to-Income Ratio Step Description 1 Add: Items 15+16+17+18+20+40 = Debt 2 Add: Items 31+38 = Income 3 Divide: Debt ÷ Income = Debt-to-Income Ratio 4 Round: To the nearest two digits The “Debt-to-Income Ratio” heading in Topic 10, subsection b of this chapter contains special procedures to	VA_Guidelines.txt
f4e74a71-9ee1-46cd-bafa-1ee94f85c7d9	b of this chapter contains special procedures to apply if the ratio exceeds 41 percent	VA_Guidelines.txt
001364a1-f915-42bb-8efd-8e6270f3320e	.	VA_Guidelines.txt
d1cdf56e-6128-46f6-941f-56cfe94906be	Only the borrower's actual income may be used to calculate the residual income. Care should be exercised to ensure that the income considered tax-exempt is likely to continue and remain untaxed. Continued on next page 4-51 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 9: How to Complete VA Form 26-6393, Loan Analysis, continued b.	VA_Guidelines.txt
34b77eef-2399-4b3e-af12-27e411ed4130	Debt-to-Income Ratio – Item 44, continued Tax-free income includes certain military allowances, child support payments, workers’ compensation benefits, disability retirement payments, and certain types of public assistance payments.	VA_Guidelines.txt
4c9bc737-f3e6-46ee-863f-d9b55ab0fe05	Verify that the income is indeed tax-free before “grossing up.” Tax-free income may be “grossed up” for purposes of calculating the debt-to- income ratio only. · This is a tool that may be used to lower the debt ratio for borrowers who clearly qualify for the loan	VA_Guidelines.txt
805031e5-6f1c-4c29-a001-df3ba0efe8aa	. · “Grossing up” involves adjusting the income upward to a pre-tax or gross income amount which, after deducting state and Federal income taxes, equals the tax-exempt income. · Use current IRS and state income tax withholding tables to determine an amount which can be prudently employed to adjust the borrower’s actual income.	VA_Guidelines.txt
8952312d-d295-4820-9e86-b7b3930e23d3	Use a figure of 125 percent of the borrower’s non- taxable income when “grossing up.” · Do not add non-taxable income to taxable income before “grossing up.” · If “grossing up” is used, indicate such and provide the “grossed up” ratio of 125 percent in item 47, “Remarks.” The actual amounts of the borrower’s non-taxable income should not be adjusted in in line 38. c.	VA_Guidelines.txt
169530e5-8f2b-4ee8-b813-d382865672b5	Past Credit Record – Item 45 Indicate whether the borrower (and spouse, if applicable) is a satisfactory or unsatisfactory credit risk based on a complete analysis of credit data. 4-52 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 10: How to Analyze the Information on VA Form 26-6393, Loan Analysis Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.	VA_Guidelines.txt
f9b37272-4716-43fe-90cb-945bfdf83234	Residual Income VA’s minimum residual incomes (balance available for family support) are a guide. They should not automatically trigger approval or rejection of a loan. Instead, consider residual income in conjunction with all other credit factors. However, an inadequate residual income alone can be a basis for disapproving a loan.	VA_Guidelines.txt
51774c55-3218-4227-8d70-1e5be71d81c9	If residual income is marginal, look to other indicators such as the borrower’s credit history, and in particular, whether and how the borrower has previously handled similar housing expense. Consider the ages of the borrower’s dependents in determining the adequacy of residual income. b.	VA_Guidelines.txt
51cd6d35-708a-4720-bc95-70a5ebcf3421	Debt-to-Income Ratio VA’s debt-to-income ratio is a ratio of total monthly debt payments (housing expense, installment debts, and other obligations listed in section D of VA Form 26-6393, Loan Analysis, to gross monthly income. It is a guide and, as an underwriting factor, it is secondary to the residual income. It should not automatically trigger approval or rejection of a loan.	VA_Guidelines.txt
1271e52b-f37a-45ab-8714-0dfdb6debf93	Instead, consider the ratio in conjunction with all other credit factors.	VA_Guidelines.txt
a4e1d58f-a273-4059-ab73-5c34bf05cf40	A ratio greater than 41 percent requires close scrutiny unless: · the ratio is greater than 41 percent unless it is larger due solely to the existence of tax- free income which should be noted in the loan file), the loan may be approved with justification, by the underwriter's supervisor, or · residual income exceeds the guideline by at least 20 percent.	VA_Guidelines.txt
4d85942c-00fc-4c88-bd7b-869a86d6c5ca	Loans closed automatically with a debt-to-income ratio greater than 41 percent: · Include a statement justifying the reasons for approval, signed by the underwriter’s supervisor, unless residual income exceeds the guideline by at least 20 percent. · The statement must include the reason(s) for approving the loan and list the compensating factors justifying approval of the loan. c.	VA_Guidelines.txt
9888406a-f5a1-41e0-a7ac-0d4946d1449d	Credit History A poor credit history alone is a basis for disapproving a loan. If credit history is marginal, look to other factors such as residual income. Continued on next page 4-53 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 10: How to Analyze the Information on VA Form 26-6393, Loan Analysis, continued d.	VA_Guidelines.txt
58b4b386-627d-4249-bdab-1dea1df14223	Compensating Factors Compensating factors may affect the loan decision. These factors are especially important when reviewing loans which are marginal with respect to residual income or debt-to-income ratio. They cannot be used to compensate for unsatisfactory credit. Valid compensating factors should represent strengths rather than mere satisfaction of basic program requirements.	VA_Guidelines.txt
bfb21a36-cefc-400f-8497-eee05f7ccb6a	For example, the fact that a borrower has sufficient assets for closing purposes, or meets the residual income guideline, is not a compensating factor. Valid compensating factors should logically be able to compensate (to some extent) for the identified weakness in the loan.	VA_Guidelines.txt
8b1acf3b-ca1d-4b69-9eff-e4dc1aba694b	For example, significant liquid assets may compensate for a residual income shortfall whereas long-term employment would not.	VA_Guidelines.txt
7705b7e2-d6c9-4352-8d14-b82ec80e3877	Compensating factors include, but are not limited to the following: · excellent credit history, · conservative use of consumer credit, · minimal consumer debt, · long-term employment, · significant liquid assets, · sizable downpayment, · the existence of equity in refinancing loans, · little or no increase in shelter expense, · military benefits, · satisfactory homeownership experience, · high	VA_Guidelines.txt
c2e60264-738e-4cd8-a283-f8a5fa8df8d0	· satisfactory homeownership experience, · high residual income, · low debt-to-income ratio, · tax credits for child care, and · tax benefits of home ownership	VA_Guidelines.txt
001c8484-b35d-4a43-aa07-fb12b3ef84b8	. e.	VA_Guidelines.txt
b84ba77b-1208-4437-9975-36e689bf71b4	Compare Previous and Proposed Shelter Expenses Closely scrutinize a case in which the borrower will be paying significantly higher shelter expenses than he or she currently pays. Consider the: · ability of the borrower to accumulate liquid assets, and · amount of debts incurred while paying a less amount for shelter.	VA_Guidelines.txt
7cee61b4-f509-422d-92ad-2565b13964af	If a borrower’s application shows little or no reserves and excessive obligations, it may not be reasonable to conclude that a substantial increase in shelter expenses can be absorbed. Continued on next page 4-54 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 10: How to Analyze the Information on VA Form 26-6393, Loan Analysis, continued f.	VA_Guidelines.txt
8f620d27-4abf-4cbd-b038-90f156a5bfc6	Home Mortgage Disclosure Act (HMDA) As a result of releases of Home Mortgage Disclosure Act (HMDA) data, many lenders are increasingly concerned that they are taking all appropriate measures to assure access by minorities and lower income households to home mortgage loans.	VA_Guidelines.txt
d768391d-d1fe-4717-843c-a1c187d0a8a8	VA believes that it is important for lenders to be aware of how effectively the VA Home Loan Program can assist them in meeting this goal. Compatibility of VA Program with HMDA The no down payment feature is, of course, a primary advantage for individuals with low-to- moderate incomes.	VA_Guidelines.txt
8d1c46d0-2123-433e-929c-603aed1282b0	However, lenders should not overlook other aspects of the VA program that will help in underwriting loans for such borrowers. VA Credit Standards are written as guidelines and are meant to be interpreted and used just that way, taking into consideration all of an individual loan borrower’s financial, employment and family circumstances.	VA_Guidelines.txt
68bcfae7-c055-46ee-83ad-9a3c3f624b0a	Purpose of HMDA VA encourages underwriters to find ways to approve loan applications which ought to be approved but may not appear approvable upon direct application of the credit standards.	VA_Guidelines.txt
9d4bd457-d460-4d47-a03a-66a3007999e7	Underwriters are encouraged to give consideration to every possible appropriate factor in seeking a proper basis for approving loan applications for every qualified Veteran	VA_Guidelines.txt
31d485f4-c6d0-4991-9d6f-0ec27c67540e	. 4-55 CHAPTER 5: HOW TO PROCESS VA LOANS AND SUBMIT THEM TO VA Overview Topic Title Page 1 Processing Procedures 5-2 2 How to Submit Loan Documents to VA 5-6 3 Prior Approval Loan Procedures 5-7 4 Automatically Closed Loan Procedures 5-15 5 Processing Loan Assumptions by the Current Servicer or Holder of the VA 5-17 Loan 5-1 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit	VA_Guidelines.txt
a5cec6df-aed9-4332-ba8b-813b3cf83e73	Chapter 5: How to Process VA Loans and Submit them to VA Topic 1: Processing Procedures Change Date: May 14, 2024 · Section a, Order of Completion, has been updated to add a step for submission of VA Form 26-8937, Verification of VA Benefits, if the Veteran indicates they have a pre- discharge disability claim pending with VA	VA_Guidelines.txt
61be16fc-ca89-4a6b-9ad6-102ff61e37db	. · Section b, How to Obtain a Certificate of Eligibility, has been updated to replace references to e-benefits with va.gov. · Section f, Requirements for Active-Duty Service members, has been updated with information on pre-discharge claim information. · This topic has been updated to replace references to the Regional Loan Center (RLC) with VA. a.	VA_Guidelines.txt
4921a851-b6a8-476f-bbe2-965169d17653	Order of Completion The COE must be ordered prior to requesting an appraisal. The procedures discussed in this topic must be initiated and may be completed in any feasible order, with the exception of the Certificate of Eligibility (COE), as long as they are all completed prior to loan closing.	VA_Guidelines.txt
fd388bbe-e189-4a14-8908-523f02e97651	These procedures apply to both prior approval loans and loans closed automatically (except the procedure which specifically refers to prior approval loans).	VA_Guidelines.txt
37725378-256f-49f1-ac9d-8c5bcca73938	To avoid delays in closing, it is recommended that the lender take the following actions in the very early stages of loan processing: · obtain a COE, unless the loan is an Interest Rate Reduction Refinancing Loan (IRRRL), · if the Veteran is an active-duty Service member and indicates they have a pre-discharge claim pending, complete and submit VA Form 26-8937, Verification of VA Benefits, (see	VA_Guidelines.txt
85cc23af-7d63-4539-9e0c-16f4a62c4a23	Form 26-8937, Verification of VA Benefits, (see section f), · request a VA appraisal or IRRRL case assignment in VA’s web-based loan guaranty system (WebLGY), (see Chapter 10 of this handbook for the steps to request an appraisal), · initiate the Credit Alert Verification Report System (CAIVRS) (see Chapter 4 of the Lender’s Handbook) and, · request a credit report and verifications, if required	VA_Guidelines.txt
72045737-9e62-4d0c-83b3-d258ca8c1663	a credit report and verifications, if required (see Chapter 4 of this handbook)	VA_Guidelines.txt
dc5097bd-ff8d-4ecc-8e34-45b45d89bdc4	.	VA_Guidelines.txt
118918e4-d373-4f2d-9ccd-b76ba7bf3898	Continued on next page 5-2 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 1: Processing Procedures, continued b. How to Obtain a Certificate of Eligibility Verify the Veteran’s or surviving spouse’s eligibility for home loan benefits and amount of available entitlement by obtaining a COE in WebLGY.	VA_Guidelines.txt
aa01f727-2b27-4c82-9aec-e427ac739157	It is highly suggested that lenders obtain a COE online through WebLGY for the most efficient processing times.	VA_Guidelines.txt
588af1bb-3051-4d33-9043-fe70e9f9308d	Veterans may also apply online through www.va.gov. · A COE obtained by the borrower on www.va.gov will be in WebLGY. · This COE can be accessed by the lender using at the Veteran’s social security number and date of birth. · An additional or updated COE does not need to be obtained or updated unless a change needs to be made to the COE. · Please examine and understand the conditions of the COE	VA_Guidelines.txt
dbdb57e3-0fd8-4252-b3cf-78b89a98e338	. · Failure to comply with the COE conditions may result in an ineligible loan (see Chapter 2 of this handbook). c.	VA_Guidelines.txt
ba0399c9-20a7-4996-9346-eb45de5716f3	Establish Reasonable Value of the Property After requesting an appraisal in WebLGY, the appraisal report is uploaded into WebLGY. The Staff Appraisal Reviewer (SAR) will review the appraisal and issue the Notice of Value (NOV). A copy of the NOV is available in WebLGY. The lender must obtain evidence of compliance with any NOV requirements. d.	VA_Guidelines.txt
c4cf580a-4143-455c-9ad0-5972cb5fb569	Determine if VA’s Occupancy Requirement is Met Determine whether the Veteran meets VA’s occupancy requirement. The loan cannot be closed as a VA loan unless the requirement is met (see Chapter 3 of this handbook for occupancy requirements). e. Underwrite the Loan Complete the procedures, verifications, and VA Form 26-6393, Loan Analysis, described in Chapter 4 of this handbook.	VA_Guidelines.txt
ca140e13-b163-4429-aa75-67e8fc08f87e	Compare information received from different sources and resolve any discrepancies. Examples may include, but not limited to: · resolving differences in the number of dependents, and · resolving credit history or employment stability/reliability discrepancies, and · resolving the amount or status of monthly obligation(s).	VA_Guidelines.txt
a7025e42-6581-425e-b60c-b37ebe96eb64	The final signed Uniform Residential Loan Application (URLA), VA Form 26-6393, Loan Analysis, and final Automated System Feedback, if applicable, should all reflect the same information. Continued on next page 5-3 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 1: Processing Procedures, continued f.	VA_Guidelines.txt
98c748a9-621e-4964-966e-bc161cc30560	Requirements for Active Duty Service members Funding Fee Exemption Status: Lenders will ask active duty Service members if they have a pre-discharge disability claim pending with VA. If the COE funding fee status shows Non- Exempt, the lender will submit VA Form 26-8937, Verification of VA Benefits.	VA_Guidelines.txt
69c43517-1010-4695-b6c9-2c9745a5fb3e	If a proposed or memorandum rating is not obtained and a closing takes place, the Service member is not eligible for a funding fee refund exemption and will not be entitled to a refund from VA. VA Form 26-8937 should be uploaded to the existing COE record by completing a “New Application” under “Electronic Application” in WebLGY.	VA_Guidelines.txt
f7724f98-0507-4425-9c08-ff1c82767186	When submitting the application, the form should be uploaded as the document type “Form 26-8937”. The time required to issue a memorandum rating varies. If the Service member has any questions related to a pre-discharge claim, they should contact VA at 1-800-827-1000. See Chapter 8 for additional information on the VA Funding Fee.	VA_Guidelines.txt
510f7d33-ff6f-491a-bf68-5d92de89e9d1	Eligibility Conditions: Ensure the Veteran, eligible as an active-duty member, is still on active duty at the time of closing if the COE indicates: “Valid unless discharged or released subsequent to date of this certificate.	VA_Guidelines.txt
5bdadcd6-d98b-4c26-bbcd-c7967242fa00	A certification of continuous active duty as of the date of note is required.” The Veteran certifies their continuous active duty service on VA Form 26-1820, Report and Certification of Loan Disbursement.	VA_Guidelines.txt
326e40d5-619f-491b-a0e0-e279f3cb0e7d	If the lender becomes aware that the applicant is no longer on active duty, the loan may not be closed unless VA re-establishes the Veteran’s eligibility as follows: · A Veteran released from active duty must have a DD Form 214, Certificate of Release or Discharge from Active Duty, with time served, Character of Service Discharge, and reason for the discharge listed.	VA_Guidelines.txt
b0a75fca-d796-4728-803c-8b3448629a40	It must be uploaded into WebLGY for the issuance of a new COE. · A Veteran released from the National Guard or Reserves must have evidence of time served and an Honorable discharge.	VA_Guidelines.txt
36898d8f-4eb9-47fc-9bc9-308e1cd49995	This must be uploaded into WebLGY for the issuance of a new COE. · If a COE was issued based upon active-duty service and the Veteran has been separated, eligibility must be re-determined based upon their length of service and character of service.	VA_Guidelines.txt
645fd10e-a01f-4e15-add9-0df700fea6f1	Counseling Checklist: Ensure every Service member who applies for a loan while still in service is counseled with VA Form 26-0592, Counseling Checklist for Military Homebuyers, as early as possible in the transaction. The active duty Veteran’s and lender’s signature on the form signifies counseling has been completed.	VA_Guidelines.txt
26fcf106-a8b1-4cd2-86a2-7b5d2ba01c99	Continued on next page 5-4 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 1: Processing Procedures, continued g. Obtain a Certificate of Commitment on Prior Approval Loans If the loan requires prior approval, upload the loan file to WebLGY for review (see Topic 3 of this chapter).	VA_Guidelines.txt
8b6b8ba7-1fbe-4994-bc66-6d7796b32b27	If the prior approval loan is approved by VA, a VA Certificate of Commitment will be issued by VA to the lender. Ensure compliance with any conditions listed on the Certificate of Commitment before closing the loan.	VA_Guidelines.txt
e59287c2-7c38-43b1-91ad-4e12c30ec098	To obtain the loan guaranty certificate, the closing package must be uploaded into WebLGY, for VA’s final review	VA_Guidelines.txt
fd2e7464-6e04-48d6-bea2-db013a951416	. 5-5 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 2: How to Submit Loan Documents to VA Change Date: May 14, 2024 · Section a has been updated to replace the reference to the Veterans Information Portal and now refers lenders to Appendix B for information on submitting documents to VA. a.	VA_Guidelines.txt
f2b27026-2b19-4263-83ce-1ae3a12feed3	Where and When to Submit Documents Generally, lenders only need to submit documents to VA when the loan requires prior approval or VA requests copies of the origination package for a Full File Loan Review (FFLR). Appendix B provides process specific stacking orders and information on how a lender should submit the requested documents to VA. b.	VA_Guidelines.txt
bf3aef89-796b-4678-88df-5fc040c3e4f0	VA Loan Number A 12-digit VA Loan Identification Number (LIN) is assigned to each loan by VA at the time the appraisal or Interest Rate Reduction Refinancing Loan (IRRRL) is requested. Use this number electronically in VA systems or where requested on VA forms and other documents. Submitting an incorrect VA loan number can delay processing of the guaranty. c.	VA_Guidelines.txt
65c947e6-a0f8-49ee-b0a3-b5ff437f7993	Who Can Sign Documents for the Lender? Under certain circumstances, VA requires specific parties to execute documents.	VA_Guidelines.txt
c25889ba-05d3-44a3-9e70-fcae0f837227	For example: · a VA-approved credit underwriter must approve or disapprove a loan for a non- supervised automatic lender (note: the SAR designation does not automatically confer credit underwriting authority), · an officer of the company must sign the Lender’s Loan Quality Certification.	VA_Guidelines.txt
ce428321-93b2-4a75-961c-11be5fed6bb5	Where VA does not have a specific requirement, branch managers, employees, and agents of the lender or holder may execute VA forms in the name of, and on behalf of, the principals. d. Use of Electronic Documents When submitting loan documents to VA, lenders may use electronic documents. Lenders must be able to provide VA’s audit team members with printed, digital, or on-line access to records.	VA_Guidelines.txt
39a66075-b69f-43f9-9e18-f90ea5ed97b9	Lenders are expected to continually monitor the integrity of their electronic system to ensure consistent quality and to prevent unauthorized alternation or destruction of records	VA_Guidelines.txt

f6c51ea1-35e6-4531-a3da-ec0274b659c2

. for self- employed with all line items captured: borrowers (Topic 2 of · signed copies of individual this chapter) tax returns for the most recent 2- year period or tax transcripts, or · individual income information obtained from the IRS via one of the following forms: □ Form 8821 (or an alternate form acceptable to the IRS that collects comparable information) or □ Form 4506 (or an alternate

VA_Guidelines.txt

e5ba0642-ca84-4ace-9020-1c1804d1ca3a

information) or □ Form 4506 (or an alternate form acceptable to the IRS that collects comparable information)

VA_Guidelines.txt

f24a6d41-aa96-4081-bc27-5048a67e75ba

.

VA_Guidelines.txt

77459e55-4cbc-476e-b70f-fb17ba9fca2a

Balance sheets and No balance sheet or YTD Profit No balance sheet or YTD P&L profit and loss and Loss (YTD P&L) is is required. statements for self- required if origination date is employed borrowers < 7 months from the business’ (Topic 2 of this fiscal year end (for which tax chapter). returns or information from the IRS via Form 8821 or Form 4506 were provided)

VA_Guidelines.txt

964b06d6-a4da-42d2-af08-9af8c6f12c84

. 4-46 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 8: Automated Underwriting Cases (AUS), continued e.

VA_Guidelines.txt

fa40db56-5d05-4a99-a390-ab4a6ec9e8f3

Documentation Guidelines for Borrower(s) Self-Employed, continued Table 7: Documentation Guidelines for Borrower(s) who are Self-Employed, continued Subject and Documentation Guidelines Documentation Reductions Reference and Reductions for Refer for Accept/Approve Business tax returns Provide one of the following, No business tax returns are for self-employed with all line items captured:

VA_Guidelines.txt

64a11dc0-948a-4d03-93f6-ac65d3c0b8c3

for self-employed with all line items captured: required if all of the following borrowers (Topic 2 of · Signed copies of business conditions are met: this chapter) tax returns for the most · Borrower proves · recent 2-year period

VA_Guidelines.txt

8e0a37df-e924-4ae0-a3ad-ed44aaacafa3

. ownership of the business Business income for at least the past 5 years. information obtained from · Individual tax returns the IRS via one of the reflect consistent income following forms: for the past 2 years. □ Form 8821 (or an · Funds for downpayment or alternate form closing costs are not from acceptable to the the business.

VA_Guidelines.txt

ef1a40b5-57ed-49c0-97ba-f7cd23685b06

IRS that collects comparable information) or □ Form 4506 (or an alternate form acceptable to the IRS that collects comparable information).

VA_Guidelines.txt

b8261ebe-f672-41a5-b20e-e34e8cb53657

Verify assets to close Provide bank/asset statements Provide bank/asset statements in the borrower’s covering the most recent 2- covering most recent 1- month name (Topic 4 of this month period in lieu of a period in lieu of a VOD. chapter) Verification of Deposit (VOD)

VA_Guidelines.txt

b03d277d-fd76-4201-b45d-5bf115693e2d

. chapter) Verification of Deposit (VOD). 4-47 4-47 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 9: How to Complete VA Form 26-6393 Loan Analysis Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.

VA_Guidelines.txt

46c900b2-de2f-4658-9690-08a4b135c87f

General In order to properly enter information on VA Form 26-6393, Loan Analysis, the underwriter must understand and apply the guidelines provided in the preceding sections of this chapter. b.

VA_Guidelines.txt

30d485ef-9f8b-4319-9d0f-254c6014c6b5

Estimated Monthly Shelter Expense Special instructions are listed in the following table: Table 8: Estimated Monthly Shelter Expenses Item Special Instructions 16 If taxes are expected to increase, use the increased amount. 17 Include the flood insurance premium for properties located in special flood hazard areas. 18 If special assessments are anticipated, use the anticipated amount

VA_Guidelines.txt

1aeba061-a81a-46e7-a5e4-224a6a54375f

. 19 Calculate maintenance and utility costs using 14¢ per square foot for the gross living area as per the appraisal.

VA_Guidelines.txt

373f233f-0be6-4b55-b6a6-21db97c8005f

Example: A 1,500 square foot home with a 1,500 square foot unfished basement would have a combined maintenance and utility cost of $210 (1,500sq X .14). 20 For condominiums or houses in a Planned Unit Development (PUD), include the monthly amount of maintenance assessment payable to the homeowner’s association. c.

VA_Guidelines.txt

77c12645-1b32-4cf7-a047-6b379dbd79dd

Debts and Obligations List all known debts and obligations of the borrower and spouse including any alimony and/or child support payments. Spousal support or alimony may be treated as a reduction in income; however, child support is to be treated as a liability. Place a check mark in the (3) column next to any “significant” debt or obligation.

VA_Guidelines.txt

fd71f3c1-842e-4005-8ea7-278d3fd97f05

See the topic “Analysis of Debts and Obligations” in Topic 4.05c of this chapter, for an explanation of “significant.” Job Related Expense – Section D line 29. Include any costs for child care, significant commuting costs, and any other direct or incidental costs associated with the borrower’s (or spouse’s) employment. Check this item if total job-related expenses are significant.

VA_Guidelines.txt

5e6b733b-dd42-45bc-9596-e5fcdcc92a09

Up to age 12, the lender is responsible for determining if there are any child care expenses for the borrower(s). Continued on next page 4-48 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 9: How to Complete VA Form 26-6393, Loan Analysis, continued d. Federal Income Tax – Item 32 Enter the borrower’s estimated monthly Federal income tax, based upon IRS tax tables.

VA_Guidelines.txt

77608734-78ac-44a9-996a-f02267b1d896

If the borrower has a MCC, reduce the Federal income tax by the estimated tax credit. See Topic 3, subsection b of this chapter for MCC. e. Balance Available for Family Support – Item 43 Enter the appropriate residual income amount from the following tables in the “guideline” box.

VA_Guidelines.txt

5fcd59ec-bf91-4a22-aca6-0d054a31b506

Residual income is the amount of net income remaining (after deduction of debts and obligations and monthly shelter expenses) to cover family living expenses. The numbers are based on data supplied in the Consumer Expenditures Survey (CES) published by the Department of Labor’s Bureau of Labor Statistics. They vary according to loan size, family size, and region of the country. Residual Tables.

VA_Guidelines.txt

050b4dd8-fdd8-464e-b93b-a08aba12f7ea

A key to the geographic regions is listed in the following tables: Table 9: Table of Residual Incomes by Region for Loan Amounts of $79,999 and Below 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 For Family Size Over 5: Add $75 for each additional member up to a family of seven.

VA_Guidelines.txt

2976c396-3004-4bf1-a34c-fde0b4e12db2

Table 10: Table of Residual Incomes by Region for Loan Amounts of $80,000 and Above 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 For Family Size Over 5: Add $80 for each additional member up to a family of seven.

VA_Guidelines.txt

319dffa5-3cf2-4cec-9be4-b1b09ae51bc3

Continued on next page 4-49 4-49 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 9: How to Complete VA Form 26-6393, Loan Analysis, continued e.

VA_Guidelines.txt

1a60ab4d-4fd0-4a69-9719-0ff8b7a61170

Balance Available for Family Support – Item 43, continued Table 11: Key to Geographic Regions Used on the Preceding Tables (Tables 6 and 7) Geographic Region States Northeast Connecticut, Maine, Massachusetts, New Hampshire, Vermont, New Jersey, New York, Pennsylvania, Rhode Island Midwest Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota,

VA_Guidelines.txt

19ee8f5b-eeb9-4804-8778-b61ad03f8669

Nebraska, North Dakota, Ohio, South Dakota, Wisconsin South Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, Texas, Virginia, West Virginia West Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming

VA_Guidelines.txt

0659c3f8-8034-4372-afd8-e8ee5c1d613b

New Mexico, Oregon, Utah, Washington, Wyoming Examples A Veteran has a family size of 3 purchasing a home in Arizona with a loan amount of $400,000

VA_Guidelines.txt

ef1ffe1c-4389-4bd8-bff5-aca585120850

.

VA_Guidelines.txt

915415ac-c892-48a4-9c7d-821a225a2d4d

The residual figure will be $990. A Veteran has a family size of 8 purchasing a home in Georgia with a loan amount of $150,000. The residual figure will be $1,199 (family size of 5 which is $1,039 adding $80 for each additional family member up to a family size of 7). The eighth person will not be considered in the calculation.

VA_Guidelines.txt

60fc01f9-5d8b-4b83-a4a0-afbb09b8acad

Special Instructions Count all members of the household (without regard to the nature of the relationship) when determining “family size,” including: · A borrower’s spouse who is not joining in title or on the note, and · Any other individuals who depend on the borrower for support.

VA_Guidelines.txt

4aa1d009-6143-43f1-b8c3-d4a9b3162121

If a dependent is claimed on the Federal Tax Returns, then the dependent must be considered as a member of the household, to calculate residual income. Examples · Children from a spouse’s prior marriage who are not the borrower’s legal dependents. · A dependent parent.

VA_Guidelines.txt

aa5fb8d1-4cb2-4100-963d-e01153dc5024

Continued on next page 4-50 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 9: How to Complete VA Form 26-6393, Loan Analysis, continued e.

VA_Guidelines.txt

03b25021-581d-4193-9821-3e2828c0eb25

Balance Available for Family Support – Item 43, continued Exceptions for Considering All Members of the Household The lender may omit any individuals from “family size” who are fully supported from a source of verified income which, for whatever reason, is not included in effective income in the loan analysis.

VA_Guidelines.txt

ea852ba5-9590-4990-ad66-bccb64b0b598

Examples · a spouse not obligated on the title or on the note that has stable and reliable income sufficient to support his or her living expenses. · a child for whom sufficient foster care payments or child support is received regularly, or · a parent who has sufficient stable and reliable non-taxable income.

VA_Guidelines.txt

462d8925-35a8-440f-bdcb-a79df5ee7ab1

Reducing the Residual Income Figures Reduce the residual income figure (from the above tables) by five percent if: · the borrower(s) is an active duty or retired serviceperson, or · there is a clear indication that a borrower will receive the benefits resulting from use of military-based facilities located near the property.

VA_Guidelines.txt

f1b0850d-b8c6-4d0e-84e9-22cec0b7e051

Examples include Guard and Reserve military retirees, 100 percent disabled Veterans and their family members, or Medal of Honor recipients. f. Debt-to-Income Ratio – Item 44 VA’s debt-to-income ratio is a ratio of total monthly debt payments (housing expense, installment debts, and other debt) to gross monthly income.

VA_Guidelines.txt

292fe144-02c3-4ba9-b63c-eb778c9c297a

The following steps are required to determine the debt-to-income ratio: Table 12: Steps to Determine the Debt-to-Income Ratio Step Description 1 Add: Items 15+16+17+18+20+40 = Debt 2 Add: Items 31+38 = Income 3 Divide: Debt ÷ Income = Debt-to-Income Ratio 4 Round: To the nearest two digits The “Debt-to-Income Ratio” heading in Topic 10, subsection b of this chapter contains special procedures to

VA_Guidelines.txt

f4e74a71-9ee1-46cd-bafa-1ee94f85c7d9

b of this chapter contains special procedures to apply if the ratio exceeds 41 percent

VA_Guidelines.txt

001364a1-f915-42bb-8efd-8e6270f3320e

.

VA_Guidelines.txt

d1cdf56e-6128-46f6-941f-56cfe94906be

Only the borrower's actual income may be used to calculate the residual income. Care should be exercised to ensure that the income considered tax-exempt is likely to continue and remain untaxed. Continued on next page 4-51 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 9: How to Complete VA Form 26-6393, Loan Analysis, continued b.

VA_Guidelines.txt

34b77eef-2399-4b3e-af12-27e411ed4130

Debt-to-Income Ratio – Item 44, continued Tax-free income includes certain military allowances, child support payments, workers’ compensation benefits, disability retirement payments, and certain types of public assistance payments.

VA_Guidelines.txt

4c9bc737-f3e6-46ee-863f-d9b55ab0fe05

Verify that the income is indeed tax-free before “grossing up.” Tax-free income may be “grossed up” for purposes of calculating the debt-to- income ratio only. · This is a tool that may be used to lower the debt ratio for borrowers who clearly qualify for the loan

VA_Guidelines.txt

805031e5-6f1c-4c29-a001-df3ba0efe8aa

. · “Grossing up” involves adjusting the income upward to a pre-tax or gross income amount which, after deducting state and Federal income taxes, equals the tax-exempt income. · Use current IRS and state income tax withholding tables to determine an amount which can be prudently employed to adjust the borrower’s actual income.

VA_Guidelines.txt

8952312d-d295-4820-9e86-b7b3930e23d3

Use a figure of 125 percent of the borrower’s non- taxable income when “grossing up.” · Do not add non-taxable income to taxable income before “grossing up.” · If “grossing up” is used, indicate such and provide the “grossed up” ratio of 125 percent in item 47, “Remarks.” The actual amounts of the borrower’s non-taxable income should not be adjusted in in line 38. c.

VA_Guidelines.txt

169530e5-8f2b-4ee8-b813-d382865672b5

Past Credit Record – Item 45 Indicate whether the borrower (and spouse, if applicable) is a satisfactory or unsatisfactory credit risk based on a complete analysis of credit data. 4-52 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 10: How to Analyze the Information on VA Form 26-6393, Loan Analysis Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.

VA_Guidelines.txt

f9b37272-4716-43fe-90cb-945bfdf83234

Residual Income VA’s minimum residual incomes (balance available for family support) are a guide. They should not automatically trigger approval or rejection of a loan. Instead, consider residual income in conjunction with all other credit factors. However, an inadequate residual income alone can be a basis for disapproving a loan.

VA_Guidelines.txt

51774c55-3218-4227-8d70-1e5be71d81c9

If residual income is marginal, look to other indicators such as the borrower’s credit history, and in particular, whether and how the borrower has previously handled similar housing expense. Consider the ages of the borrower’s dependents in determining the adequacy of residual income. b.

VA_Guidelines.txt

51cd6d35-708a-4720-bc95-70a5ebcf3421

Debt-to-Income Ratio VA’s debt-to-income ratio is a ratio of total monthly debt payments (housing expense, installment debts, and other obligations listed in section D of VA Form 26-6393, Loan Analysis, to gross monthly income. It is a guide and, as an underwriting factor, it is secondary to the residual income. It should not automatically trigger approval or rejection of a loan.

VA_Guidelines.txt

1271e52b-f37a-45ab-8714-0dfdb6debf93

Instead, consider the ratio in conjunction with all other credit factors.

VA_Guidelines.txt

a4e1d58f-a273-4059-ab73-5c34bf05cf40

A ratio greater than 41 percent requires close scrutiny unless: · the ratio is greater than 41 percent unless it is larger due solely to the existence of tax- free income which should be noted in the loan file), the loan may be approved with justification, by the underwriter's supervisor, or · residual income exceeds the guideline by at least 20 percent.

VA_Guidelines.txt

4d85942c-00fc-4c88-bd7b-869a86d6c5ca

Loans closed automatically with a debt-to-income ratio greater than 41 percent: · Include a statement justifying the reasons for approval, signed by the underwriter’s supervisor, unless residual income exceeds the guideline by at least 20 percent. · The statement must include the reason(s) for approving the loan and list the compensating factors justifying approval of the loan. c.

VA_Guidelines.txt

9888406a-f5a1-41e0-a7ac-0d4946d1449d

Credit History A poor credit history alone is a basis for disapproving a loan. If credit history is marginal, look to other factors such as residual income. Continued on next page 4-53 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 10: How to Analyze the Information on VA Form 26-6393, Loan Analysis, continued d.

VA_Guidelines.txt

58b4b386-627d-4249-bdab-1dea1df14223

Compensating Factors Compensating factors may affect the loan decision. These factors are especially important when reviewing loans which are marginal with respect to residual income or debt-to-income ratio. They cannot be used to compensate for unsatisfactory credit. Valid compensating factors should represent strengths rather than mere satisfaction of basic program requirements.

VA_Guidelines.txt

bfb21a36-cefc-400f-8497-eee05f7ccb6a

For example, the fact that a borrower has sufficient assets for closing purposes, or meets the residual income guideline, is not a compensating factor. Valid compensating factors should logically be able to compensate (to some extent) for the identified weakness in the loan.

VA_Guidelines.txt

8b1acf3b-ca1d-4b69-9eff-e4dc1aba694b

For example, significant liquid assets may compensate for a residual income shortfall whereas long-term employment would not.

VA_Guidelines.txt

7705b7e2-d6c9-4352-8d14-b82ec80e3877

Compensating factors include, but are not limited to the following: · excellent credit history, · conservative use of consumer credit, · minimal consumer debt, · long-term employment, · significant liquid assets, · sizable downpayment, · the existence of equity in refinancing loans, · little or no increase in shelter expense, · military benefits, · satisfactory homeownership experience, · high

VA_Guidelines.txt

c2e60264-738e-4cd8-a283-f8a5fa8df8d0

· satisfactory homeownership experience, · high residual income, · low debt-to-income ratio, · tax credits for child care, and · tax benefits of home ownership

VA_Guidelines.txt

001c8484-b35d-4a43-aa07-fb12b3ef84b8

. e.

VA_Guidelines.txt

b84ba77b-1208-4437-9975-36e689bf71b4

Compare Previous and Proposed Shelter Expenses Closely scrutinize a case in which the borrower will be paying significantly higher shelter expenses than he or she currently pays. Consider the: · ability of the borrower to accumulate liquid assets, and · amount of debts incurred while paying a less amount for shelter.

VA_Guidelines.txt

7cee61b4-f509-422d-92ad-2565b13964af

If a borrower’s application shows little or no reserves and excessive obligations, it may not be reasonable to conclude that a substantial increase in shelter expenses can be absorbed. Continued on next page 4-54 VA Lenders Handbook M26-7 Chapter 4: Credit Underwriting Topic 10: How to Analyze the Information on VA Form 26-6393, Loan Analysis, continued f.

VA_Guidelines.txt

8f620d27-4abf-4cbd-b038-90f156a5bfc6

Home Mortgage Disclosure Act (HMDA) As a result of releases of Home Mortgage Disclosure Act (HMDA) data, many lenders are increasingly concerned that they are taking all appropriate measures to assure access by minorities and lower income households to home mortgage loans.

VA_Guidelines.txt

d768391d-d1fe-4717-843c-a1c187d0a8a8

VA believes that it is important for lenders to be aware of how effectively the VA Home Loan Program can assist them in meeting this goal. Compatibility of VA Program with HMDA The no down payment feature is, of course, a primary advantage for individuals with low-to- moderate incomes.

VA_Guidelines.txt

8d1c46d0-2123-433e-929c-603aed1282b0

However, lenders should not overlook other aspects of the VA program that will help in underwriting loans for such borrowers. VA Credit Standards are written as guidelines and are meant to be interpreted and used just that way, taking into consideration all of an individual loan borrower’s financial, employment and family circumstances.

VA_Guidelines.txt

68bcfae7-c055-46ee-83ad-9a3c3f624b0a

Purpose of HMDA VA encourages underwriters to find ways to approve loan applications which ought to be approved but may not appear approvable upon direct application of the credit standards.

VA_Guidelines.txt

9d4bd457-d460-4d47-a03a-66a3007999e7

Underwriters are encouraged to give consideration to every possible appropriate factor in seeking a proper basis for approving loan applications for every qualified Veteran

VA_Guidelines.txt

31d485f4-c6d0-4991-9d6f-0ec27c67540e

. 4-55 CHAPTER 5: HOW TO PROCESS VA LOANS AND SUBMIT THEM TO VA Overview Topic Title Page 1 Processing Procedures 5-2 2 How to Submit Loan Documents to VA 5-6 3 Prior Approval Loan Procedures 5-7 4 Automatically Closed Loan Procedures 5-15 5 Processing Loan Assumptions by the Current Servicer or Holder of the VA 5-17 Loan 5-1 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit

VA_Guidelines.txt

a5cec6df-aed9-4332-ba8b-813b3cf83e73

Chapter 5: How to Process VA Loans and Submit them to VA Topic 1: Processing Procedures Change Date: May 14, 2024 · Section a, Order of Completion, has been updated to add a step for submission of VA Form 26-8937, Verification of VA Benefits, if the Veteran indicates they have a pre- discharge disability claim pending with VA

VA_Guidelines.txt

61be16fc-ca89-4a6b-9ad6-102ff61e37db

. · Section b, How to Obtain a Certificate of Eligibility, has been updated to replace references to e-benefits with va.gov. · Section f, Requirements for Active-Duty Service members, has been updated with information on pre-discharge claim information. · This topic has been updated to replace references to the Regional Loan Center (RLC) with VA. a.

VA_Guidelines.txt

4921a851-b6a8-476f-bbe2-965169d17653

Order of Completion The COE must be ordered prior to requesting an appraisal. The procedures discussed in this topic must be initiated and may be completed in any feasible order, with the exception of the Certificate of Eligibility (COE), as long as they are all completed prior to loan closing.

VA_Guidelines.txt

fd388bbe-e189-4a14-8908-523f02e97651

These procedures apply to both prior approval loans and loans closed automatically (except the procedure which specifically refers to prior approval loans).

VA_Guidelines.txt

37725378-256f-49f1-ac9d-8c5bcca73938

To avoid delays in closing, it is recommended that the lender take the following actions in the very early stages of loan processing: · obtain a COE, unless the loan is an Interest Rate Reduction Refinancing Loan (IRRRL), · if the Veteran is an active-duty Service member and indicates they have a pre-discharge claim pending, complete and submit VA Form 26-8937, Verification of VA Benefits, (see

VA_Guidelines.txt

85cc23af-7d63-4539-9e0c-16f4a62c4a23

Form 26-8937, Verification of VA Benefits, (see section f), · request a VA appraisal or IRRRL case assignment in VA’s web-based loan guaranty system (WebLGY), (see Chapter 10 of this handbook for the steps to request an appraisal), · initiate the Credit Alert Verification Report System (CAIVRS) (see Chapter 4 of the Lender’s Handbook) and, · request a credit report and verifications, if required

VA_Guidelines.txt

72045737-9e62-4d0c-83b3-d258ca8c1663

a credit report and verifications, if required (see Chapter 4 of this handbook)

VA_Guidelines.txt

dc5097bd-ff8d-4ecc-8e34-45b45d89bdc4

.

VA_Guidelines.txt

118918e4-d373-4f2d-9ccd-b76ba7bf3898

Continued on next page 5-2 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 1: Processing Procedures, continued b. How to Obtain a Certificate of Eligibility Verify the Veteran’s or surviving spouse’s eligibility for home loan benefits and amount of available entitlement by obtaining a COE in WebLGY.

VA_Guidelines.txt

aa01f727-2b27-4c82-9aec-e427ac739157

It is highly suggested that lenders obtain a COE online through WebLGY for the most efficient processing times.

VA_Guidelines.txt

588af1bb-3051-4d33-9043-fe70e9f9308d

Veterans may also apply online through www.va.gov. · A COE obtained by the borrower on www.va.gov will be in WebLGY. · This COE can be accessed by the lender using at the Veteran’s social security number and date of birth. · An additional or updated COE does not need to be obtained or updated unless a change needs to be made to the COE. · Please examine and understand the conditions of the COE

VA_Guidelines.txt

dbdb57e3-0fd8-4252-b3cf-78b89a98e338

. · Failure to comply with the COE conditions may result in an ineligible loan (see Chapter 2 of this handbook). c.

VA_Guidelines.txt

ba0399c9-20a7-4996-9346-eb45de5716f3

Establish Reasonable Value of the Property After requesting an appraisal in WebLGY, the appraisal report is uploaded into WebLGY. The Staff Appraisal Reviewer (SAR) will review the appraisal and issue the Notice of Value (NOV). A copy of the NOV is available in WebLGY. The lender must obtain evidence of compliance with any NOV requirements. d.

VA_Guidelines.txt

c4cf580a-4143-455c-9ad0-5972cb5fb569

Determine if VA’s Occupancy Requirement is Met Determine whether the Veteran meets VA’s occupancy requirement. The loan cannot be closed as a VA loan unless the requirement is met (see Chapter 3 of this handbook for occupancy requirements). e. Underwrite the Loan Complete the procedures, verifications, and VA Form 26-6393, Loan Analysis, described in Chapter 4 of this handbook.

VA_Guidelines.txt

ca140e13-b163-4429-aa75-67e8fc08f87e

Compare information received from different sources and resolve any discrepancies. Examples may include, but not limited to: · resolving differences in the number of dependents, and · resolving credit history or employment stability/reliability discrepancies, and · resolving the amount or status of monthly obligation(s).

VA_Guidelines.txt

a7025e42-6581-425e-b60c-b37ebe96eb64

The final signed Uniform Residential Loan Application (URLA), VA Form 26-6393, Loan Analysis, and final Automated System Feedback, if applicable, should all reflect the same information. Continued on next page 5-3 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 1: Processing Procedures, continued f.

VA_Guidelines.txt

98c748a9-621e-4964-966e-bc161cc30560

Requirements for Active Duty Service members Funding Fee Exemption Status: Lenders will ask active duty Service members if they have a pre-discharge disability claim pending with VA. If the COE funding fee status shows Non- Exempt, the lender will submit VA Form 26-8937, Verification of VA Benefits.

VA_Guidelines.txt

69c43517-1010-4695-b6c9-2c9745a5fb3e

If a proposed or memorandum rating is not obtained and a closing takes place, the Service member is not eligible for a funding fee refund exemption and will not be entitled to a refund from VA. VA Form 26-8937 should be uploaded to the existing COE record by completing a “New Application” under “Electronic Application” in WebLGY.

VA_Guidelines.txt

f7724f98-0507-4425-9c08-ff1c82767186

When submitting the application, the form should be uploaded as the document type “Form 26-8937”. The time required to issue a memorandum rating varies. If the Service member has any questions related to a pre-discharge claim, they should contact VA at 1-800-827-1000. See Chapter 8 for additional information on the VA Funding Fee.

VA_Guidelines.txt

510f7d33-ff6f-491a-bf68-5d92de89e9d1

Eligibility Conditions: Ensure the Veteran, eligible as an active-duty member, is still on active duty at the time of closing if the COE indicates: “Valid unless discharged or released subsequent to date of this certificate.

VA_Guidelines.txt

5bdadcd6-d98b-4c26-bbcd-c7967242fa00

A certification of continuous active duty as of the date of note is required.” The Veteran certifies their continuous active duty service on VA Form 26-1820, Report and Certification of Loan Disbursement.

VA_Guidelines.txt

326e40d5-619f-491b-a0e0-e279f3cb0e7d

If the lender becomes aware that the applicant is no longer on active duty, the loan may not be closed unless VA re-establishes the Veteran’s eligibility as follows: · A Veteran released from active duty must have a DD Form 214, Certificate of Release or Discharge from Active Duty, with time served, Character of Service Discharge, and reason for the discharge listed.

VA_Guidelines.txt

b0a75fca-d796-4728-803c-8b3448629a40

It must be uploaded into WebLGY for the issuance of a new COE. · A Veteran released from the National Guard or Reserves must have evidence of time served and an Honorable discharge.

VA_Guidelines.txt

36898d8f-4eb9-47fc-9bc9-308e1cd49995

This must be uploaded into WebLGY for the issuance of a new COE. · If a COE was issued based upon active-duty service and the Veteran has been separated, eligibility must be re-determined based upon their length of service and character of service.

VA_Guidelines.txt

645fd10e-a01f-4e15-add9-0df700fea6f1

Counseling Checklist: Ensure every Service member who applies for a loan while still in service is counseled with VA Form 26-0592, Counseling Checklist for Military Homebuyers, as early as possible in the transaction. The active duty Veteran’s and lender’s signature on the form signifies counseling has been completed.

VA_Guidelines.txt

26fcf106-a8b1-4cd2-86a2-7b5d2ba01c99

Continued on next page 5-4 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 1: Processing Procedures, continued g. Obtain a Certificate of Commitment on Prior Approval Loans If the loan requires prior approval, upload the loan file to WebLGY for review (see Topic 3 of this chapter).

VA_Guidelines.txt

8b6b8ba7-1fbe-4994-bc66-6d7796b32b27

If the prior approval loan is approved by VA, a VA Certificate of Commitment will be issued by VA to the lender. Ensure compliance with any conditions listed on the Certificate of Commitment before closing the loan.

VA_Guidelines.txt

e59287c2-7c38-43b1-91ad-4e12c30ec098

To obtain the loan guaranty certificate, the closing package must be uploaded into WebLGY, for VA’s final review

VA_Guidelines.txt

fd2e7464-6e04-48d6-bea2-db013a951416

. 5-5 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 2: How to Submit Loan Documents to VA Change Date: May 14, 2024 · Section a has been updated to replace the reference to the Veterans Information Portal and now refers lenders to Appendix B for information on submitting documents to VA. a.

VA_Guidelines.txt

f2b27026-2b19-4263-83ce-1ae3a12feed3

Where and When to Submit Documents Generally, lenders only need to submit documents to VA when the loan requires prior approval or VA requests copies of the origination package for a Full File Loan Review (FFLR). Appendix B provides process specific stacking orders and information on how a lender should submit the requested documents to VA. b.

VA_Guidelines.txt

bf3aef89-796b-4678-88df-5fc040c3e4f0

VA Loan Number A 12-digit VA Loan Identification Number (LIN) is assigned to each loan by VA at the time the appraisal or Interest Rate Reduction Refinancing Loan (IRRRL) is requested. Use this number electronically in VA systems or where requested on VA forms and other documents. Submitting an incorrect VA loan number can delay processing of the guaranty. c.

VA_Guidelines.txt

65c947e6-a0f8-49ee-b0a3-b5ff437f7993

Who Can Sign Documents for the Lender? Under certain circumstances, VA requires specific parties to execute documents.

VA_Guidelines.txt

c25889ba-05d3-44a3-9e70-fcae0f837227

For example: · a VA-approved credit underwriter must approve or disapprove a loan for a non- supervised automatic lender (note: the SAR designation does not automatically confer credit underwriting authority), · an officer of the company must sign the Lender’s Loan Quality Certification.

VA_Guidelines.txt

ce428321-93b2-4a75-961c-11be5fed6bb5

Where VA does not have a specific requirement, branch managers, employees, and agents of the lender or holder may execute VA forms in the name of, and on behalf of, the principals. d. Use of Electronic Documents When submitting loan documents to VA, lenders may use electronic documents. Lenders must be able to provide VA’s audit team members with printed, digital, or on-line access to records.

VA_Guidelines.txt

39a66075-b69f-43f9-9e18-f90ea5ed97b9

Lenders are expected to continually monitor the integrity of their electronic system to ensure consistent quality and to prevent unauthorized alternation or destruction of records

VA_Guidelines.txt