Mitchell6024/quickb · Datasets at Hugging Face

id stringlengths 36 36	text stringlengths 1 400	source stringclasses 1 value
65844c11-a11b-4b79-b137-941f52d44f82	The servicer will be provided a with an NVS letter indicating VA has released the non- Veteran spouse of liability. The servicer may only charge a fee of $50 for amending its records to reflect the change. It is not necessary for the servicer to complete an ROL. For example, Mary and Jon Smith divorced after they purchased a home using Mary’s COE. She obtains the home per the divorce decree.	VA_Guidelines.txt
f939a816-42a4-4128-9fd1-d4a81568ea81	She obtains the home per the divorce decree. Since she is the Veteran and will be retaining the property, she will contact the VA RLC of jurisdiction of where the property is located to process the NVS. r. Substitution of Entitlement A Veteran may allow an assumption/ROL of his or her VA-guaranteed loan with the expectation of being able to have his or her entitlement restored.	VA_Guidelines.txt
3cb64a42-9571-4724-93cd-cc3bd9f961a0	A restoration may be needed to obtain another VA-guaranteed loan in the future by restoring the previously used entitlement for full entitlement benefits. Entitlement cannot be restored until VA makes a determination of eligibility for the Veteran assumer and Veteran seller and processes the SOE. VA completes the SOE process after a servicer closes the assumption and issues an ROL.	VA_Guidelines.txt
76c26cc5-9440-42e0-9d49-2b64c548ea7a	Questions about an SOE should be directed to the VA RLC with jurisdiction where the property is located. It is important for the servicer to obtain a COE as soon as possible in the assumption process to determine if there is sufficient entitlement for the Veteran assumer to complete the SOE for the Veteran seller. Entitlement must be of equal amounts to substitute.	VA_Guidelines.txt
532ff143-1b6b-4b2e-a0fb-a39abfafc74b	See Chapter 3 of this handbook for determination of home loan eligibility. Continued on next page 5-27 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 5: Processing Loan Assumptions by the Current Servicer or Holder of the VA Loan, continued r.	VA_Guidelines.txt
09d85033-fa12-4f20-8e1e-e2df15a05778	Substitution of Entitlement, continued When a Veteran requests approval for a transfer of ownership, he or she may request to have entitlement restored for use on another VA loan.	VA_Guidelines.txt
2d5596ba-eb8b-445c-b96a-23964f2ef0a9	For VA to approve such a request: · the assumption (ROL) must be completed and closed by the lender; · the purchaser must be an eligible Veteran who has sufficient entitlement to substitute for that of the original Veteran; · the purchaser must certify that the property securing the loan will be occupied as his or her residence; · the purchasing Veteran must agree to the SOE; and · there must be	VA_Guidelines.txt
f22e7440-133d-4c19-82ff-8ccf9579938b	must agree to the SOE; and · there must be equal available entitlement from the assuming Veteran in order to substitute his or her entitlement with the Veteran being released of their entitlement	VA_Guidelines.txt
e1493797-189e-43be-9d6b-d18e6d2c054f	.	VA_Guidelines.txt
f1eccb3a-d7fb-429c-86b7-119dae0b7d43	The assumption (ROL) must be completed and closed by the lender. The purchaser must be an eligible Veteran who has sufficient entitlement to substitute for that of the original Veteran. The purchaser must certify that the property securing the loan will be occupied as his or her residence.	VA_Guidelines.txt
6d935c24-bfd7-4067-af5b-a2db4245cdea	The purchasing Veteran must agree to the SOE, and there must be equal available entitlement from the assuming Veteran in order to substitute his or her entitlement with the Veteran being released of their entitlement.	VA_Guidelines.txt
48843e45-1a19-4324-8e48-c01a4116e1cf	Whenever two Veterans intend to follow the SOE process, the servicer should have the Veteran purchaser complete VA Form 26-8106, Statement of Veteran Assuming GI Loan, (Substitution of entitlement). It should be included in the closing package submitted to VA. A COE for each Veteran should accompany the credit package used to approve the ROL.	VA_Guidelines.txt
960c3154-e3b6-43b0-8edc-004bd994a29d	It is important to verify the purchasing Veteran has sufficient entitlement, is willing to substitute their entitlement, and will meet occupancy requirements to substitute before the closing of the ROL to meet the requirements of an SOE. s. Unrestricted Transfers Certain transfers of ownership, otherwise subject to 38 U. S. C. 3714, do not require prior approval by a holder or VA.	VA_Guidelines.txt
bc6e0f8d-8cc0-46bc-aa54-b1e96cf0138b	Loans may not be accelerated due to these types of transfers. An ROL will not be processed. Processing charges and funding fees may not be assessed. It is permissible to charge a reasonable fee up to $50 for changing the account records, provided that there is an agreement with the borrower and it is permissible under the loan agreement.	VA_Guidelines.txt
84962b5c-3217-4390-a534-8b2a53345084	Continued on next page 5-28 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 5: Processing Loan Assumptions by the Current Servicer or Holder of the VA Loan, continued s.	VA_Guidelines.txt
302150b4-efca-4d69-8b28-4b343ee4ce9d	Unrestricted Transfers, continued Servicers must report unrestricted transfers to VA through VALERI as authorized transfers of ownership, which will typically be handled automatically by their servicing systems.	VA_Guidelines.txt
3ae80449-a33e-4cde-b43d-363071ab5300	Unrestricted transfers of ownership include: · the creation of a lien or other encumbrance subordinate to the lender’s security instrument that does not relate to a transfer of rights of occupancy in the property; · the creation of a purchase money security interest for household appliances; · a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the	VA_Guidelines.txt
f86a7635-fc20-451e-b6fd-3dc43d31a099	on the death of a joint tenant or tenant by the entirety; · the granting of a leasehold interest of 3 years or less not containing an option to purchase; · a transfer to a relative resulting from the death of a borrower; · a transfer when the spouse or child of the borrower becomes a joint owner of the property with the borrower, · a transfer into an inter-vivos trust in which the borrower is and	VA_Guidelines.txt
62fda35a-72be-49be-b205-73e3278e3eda	an inter-vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; and · a transfer resulting from a decree to dissolve a marriage, legal separation agreement, or from an incidental property settlement agreement by which the spouse of the borrower becomes the sole owner of the property	VA_Guidelines.txt
4edbd2f5-687a-4fed-88a8-a891f3802797	.	VA_Guidelines.txt
8d65b858-546f-427b-ba3c-a51c8bb1ef34	VA does not consider a sale on an installment contract, contract for deed, or similar arrangement in which title is not transferred from the seller to the buyer, to be a “disposition” of property as sale agreements are not subject to 38 U. S. C. 3714. These sale agreements do not require prior approval from the servicer or VA.	VA_Guidelines.txt
fed8c1c9-4247-4d8a-9b81-fefa3671be2a	Borrowers inquiring should be cautioned that any borrower considering a sale in this manner would remain liable for repayment of the loan under such an arrangement. Continued on next page 5-29 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 5: Processing Loan Assumptions by the Current Servicer or Holder of the VA Loan, continued t.	VA_Guidelines.txt
5345c34e-e8e3-48bc-a853-38c62c479d2a	Documentation Requirements VA does not require a servicer to change records, even if the agreement calls for the contract purchaser to make payments directly to that servicer. The contract seller is responsible for forwarding payment coupons and other information to the contract purchaser.	VA_Guidelines.txt
63014f0c-d29e-48b6-9751-ce0851feff48	Depending on the circumstances of a case, servicers may agree to change the account address to read “in care of” the contract purchaser, although the contract seller must promptly advise the servicer of any change in his or her address. Sales by installment contracts typically call for transfer of title after a certain period of time.	VA_Guidelines.txt
acfe3b87-cfa2-472d-9296-7e5d9db6f204	If the contract calls for title to transfer prior to payment in full of the VA loan, VA requires assumption approval according to the procedures previously discussed. Processing charges and VA funding fees will be applicable upon transfer.	VA_Guidelines.txt
10b33689-9d54-4814-8d90-04fcd889f201	As one of the conditions of the contract, servicers should advise the borrower that the language stating an application for assumption approval will be made, and approval secured, prior to the completion of title transfer. The contract should address the options of both parties if the request for assumption approval is denied.	VA_Guidelines.txt
60b5b1a6-4acf-4e55-8643-5eb770b7cfa6	Servicers are required to retain the supporting documentation for all transfers, assumptions, and releases of liability for at least 3 years from approval or denial.	VA_Guidelines.txt
af134daa-830f-4553-bef4-ccf0ad41a512	An assumption package should be submitted to the RLC of jurisdiction of where the property is located	VA_Guidelines.txt
8a54cced-0480-440c-848e-1d44e0ed9fb7	. 5-30 CHAPTER 6: REFINANCING LOANS Overview Topic Title Page 1 Interest Rate Reduction Refinancing Loans (IRRRLs) 6-2 2 IRRRL Made to Refinance a Delinquent Loan 6-10 3 Cash-Out Refinancing Loans 6-13 4 Quick Reference Table for IRRRLs Versus Cash-Out Refinancing Loans 6-26 5 Other Refinancing Loans 6-28 6-1 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction	VA_Guidelines.txt
693b5a84-38e0-4e5d-aeb1-d9c1ab943166	Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs) Change Date: April 10, 2009 · This section has been changed to update hyperlinks and to make minor grammatical edits	VA_Guidelines.txt
d9a9363e-fb7e-4886-abf7-7c4636ac2ec4	. a.	VA_Guidelines.txt
0ea53574-6725-4798-9752-a8336e1639a9	What is an IRRRL? An IRRRL is a VA-guaranteed loan made to refinance an existing VA-guaranteed loan, generally at a lower interest rate than the existing VA loan, and with lower principal and interest payments than the existing VA loan. Generally, no appraisal, credit information or underwriting is required on an IRRRL, and any lender may close an IRRRL automatically.	VA_Guidelines.txt
416cfe5a-5cc6-4e81-ac5a-b4c303fb612e	Note: Exceptions and specific requirements are explained in the remainder of this section. b. Interest Rate Decrease Requirement An IRRRL (which can be a fixed rate, hybrid Adjustable Rate Mortgage (ARM) or traditional ARM) must bear a lower interest rate than the loan it is refinancing unless the loan it is refinancing is an ARM. c.	VA_Guidelines.txt
a399ecf0-260d-421e-abc3-85a9ccada12f	Payment Decrease/Increase Requirements The principal and interest payment on an IRRRL must be less than the principal and interest payment on the loan being refinanced unless one of the following exceptions applies: · the IRRRL is refinancing an ARM, · term of the IRRRL is shorter than the term of the loan being refinanced, or · energy efficiency improvements are included in the IRRRL.	VA_Guidelines.txt
186433a6-7df0-4547-892a-ae3676392485	A significant increase in the Veteran’s monthly payment may occur with any of these three exceptions, especially if combined with one or more of the following: · financing of closing costs, · financing of up to two discount points, · financing of the funding fee, and/or · higher interest rate when an ARM is being refinanced.	VA_Guidelines.txt
e16fe974-734e-4139-b427-14d260f3d9fe	If the monthly payment (PITI) increases by 20 percent or more, the lender must: · determine that the Veteran qualifies for the new payment from an underwriting standpoint; such as, determine whether the borrower can support the proposed shelter expense and other recurring monthly obligations in light of income established as stable and reliable, and · include a certification that the Veteran	VA_Guidelines.txt
fbda5c07-7605-448d-9b0c-658686b314ff	and · include a certification that the Veteran qualifies for the new monthly payment which exceeds the previous payment by 20 percent or more	VA_Guidelines.txt
8613bf2d-536d-48ce-a806-378f6283b3e6	.	VA_Guidelines.txt
2220b676-a759-44cf-9266-b12cc43dc64a	Continued on next page 6-2 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued d. Veteran’s Statement and Lender’s Certification For all IRRRLs, the Veteran must sign a statement acknowledging the effect of the refinancing loan on the Veteran’s loan payments and interest rate.	VA_Guidelines.txt
bb91337c-8c94-4558-bb98-d7a7db493b6c	The statement must show the interest rate and monthly payments for the new loan versus that for the old loan. The statement must also indicate how long it would take to recoup ALL closing costs (both those included in the loan and those paid outside of closing).	VA_Guidelines.txt
686d05b7-7342-4954-a71c-787c5b7769bd	If the monthly payment (PITI) increases by 20 percent or more, the lender must include a certification that the Veteran qualifies for the new monthly payment which exceeds the previous payment by 20 percent or more.	VA_Guidelines.txt
803259e1-cb97-4697-964d-2b640253b2fb	Example: · Vet’s monthly payment decreases by $50.00. · Vet pays $5,000 in closing costs (includes all costs – closing costs, funding fee, discounts, etc). · Recoup closing costs in 100 months - $5,000 divided by $50. Note: This would not be required in those limited cases where the payment is not decreasing (reduced term of loan, etc.).	VA_Guidelines.txt
f6ce187c-c473-43cb-968c-3e0c22c8e6ed	The Veteran’s statement may be combined with the lender’s certification and should be on the lender’s own letterhead. For a sample please go to: Sample VA Rate Reduction Certification. e. What Closing Costs can be Included in the Loan?	VA_Guidelines.txt
804ec6d0-633d-4758-8aef-02ad5783a798	What Closing Costs can be Included in the Loan? The following fees and charges may be included in an IRRRL: · the VA funding fee, and · any allowable fees and charges discussed in section 2 of chapter 8; such as, all allowable closing costs, including the lender’s flat charge.	VA_Guidelines.txt
9b15ed5b-668f-4045-9008-ff7e41840fb6	Limitation on closing costs that can be included: · While the borrower may pay any reasonable amount of discount points in cash, only up to two discount points can be included in the loan amount	VA_Guidelines.txt
d6a2677d-0c33-4900-9f67-9a79165f7a2a	. · Although VA does not require an appraisal or credit underwriting on IRRRLs, any customary and reasonable credit report or appraisal expense incurred by a lender to satisfy its lending requirements may be charged to the borrower and included in the loan	VA_Guidelines.txt
b0c794ad-610c-4523-937f-cca772e5822a	. · The lender may also set the interest rate on the new loan high enough to enable the lender to pay all closing costs, as long as the requirements for lower interest rate and payments (or one of the exceptions to those requirements) are met	VA_Guidelines.txt
ecc4f4f0-9483-4095-a0b0-b43856eb2616	. · For IRRRLs to refinance loans 30 days or more past due (which must be submitted for prior approval), the following can be included in the new loan: • late payments and late charges on the old loan, and • reasonable costs if legal action to terminate the old loan has commenced.	VA_Guidelines.txt
796e36fc-74eb-4998-8f3f-7d5ed33629ab	Continued on next page 6-3 Continued on next page 6-3 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued f. When Can the Borrower Receive Cash at Closing? An IRRRL cannot be used to take equity out of the property or pay off debts, other than the VA loan being refinanced.	VA_Guidelines.txt
8209d804-5427-4259-8aca-6d432d23c3b2	Loan proceeds may only be applied to paying off the existing VA loan and to the costs of obtaining or closing the IRRRL. Therefore, the general rule is that the borrower cannot receive cash proceeds from the loan. If necessary, the refinancing loan amount must be rounded down to avoid payments of cash to the Veteran.	VA_Guidelines.txt
05aaec8f-c4c5-472b-9f0a-a0194d4f35a3	The one exception is reimbursement of the Veteran for the cost of energy efficiency improvements up to $6,000 completed within the 90 days immediately preceding the date of loan closing. Note: Use of loan proceeds for energy efficiency improvements not involving cash reimbursement of the Veteran is also an option. See chapter 7.	VA_Guidelines.txt
9aba71f2-e06d-4a71-ad60-6fd736a63228	See chapter 7. In a limited number of situations, the borrower may receive cash at closing. Some examples of situations in which VA does not object to the borrower receiving cash are: · computational errors, · changes in final pay-off figures, · up-front fees paid for the appraisal and/or credit report that are later added into the loan, and · refund of the escrow balance on the old loan.	VA_Guidelines.txt
7d13dc14-d334-4fb5-8530-5b83f823940b	This often occurs when a party other than the present holder originates the loan. VA does not set a “ceiling” or a specific dollar limitation on cash refunds resulting from adjustments at closing. However, if a situation involves a borrower receiving more than $500, consult VA as to its acceptability.	VA_Guidelines.txt
87762318-c553-49e5-8080-103d5abb3d77	Lenders and VA personnel should exercise common sense when assessing such situations and draw from basic program information to know the difference between an equity withdrawal and cash from unforeseen circumstances. g. Maximum Loan Always use VA Form 26-8923, IRRRL Worksheet, to calculate the maximum loan amount.	VA_Guidelines.txt
cc0b09a5-49e4-4bbd-8196-f266f338704b	The maximum loan amount is the existing VA loan balances plus the following: · including any late payments* and late charges, plus · allowable fees and charges (includes up to two discount points), plus · the cost of any energy efficiency improvements, and · the VA funding fee	VA_Guidelines.txt
c3d5931e-8f44-4e34-a36e-825a3eb0aeb8	. *Any IRRRL that includes delinquent payments in the loan amount must be submitted for prior approval, even when a lender has automatic authority.	VA_Guidelines.txt
1f6d076a-5a71-411e-a55b-253f895625dc	Note: There is no maximum dollar amount for VA loans. Since an IRRRL rolls the above items into the new loan and VA guarantees at least 25 percent of the loan amount (without regard to the Veteran’s entitlement), the new loan amount may be more than the limits established by the secondary market. It is the lender’s responsibility to ensure it has a marketable loan.	VA_Guidelines.txt
2c468803-c6e7-469d-8cec-e23f5417dd61	Continued on next page 6-4 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued h.	VA_Guidelines.txt
5916376a-b7cd-4489-b8d3-8b5a78b4cc7e	Amount of Guaranty and Entitlement Use No additional charge is made to the Veteran’s entitlement for an IRRRL; such as, the amount of the Veteran’s previously used and available entitlement remains the same before and after obtaining the IRRRL. The new IRRRL loan amount may be equal to, greater than, or less than, the original amount of the loan being refinanced.	VA_Guidelines.txt
b82f1dc8-6059-4f4a-9a73-0580e385eb8b	This may impact the amount of guaranty on the new loan, but not the Veteran’s use of entitlement. Example Of New Loan Amount More Than Old Loan The existing VA loan was originally made for $110,000 with a guaranty of $27,500, or 25 percent. The new IRRRL is for $112,000. The guaranty on the new loan is $28,000 or 25 percent, but the Veteran’s entitlement use remains at $27,500.	VA_Guidelines.txt
30cca602-3d5e-4210-9f00-f0f083ee46fc	Example Of New Loan Amount Less Than Old Loan The existing VA loan was originally made for $42,000 with a guaranty of $25,000, or almost 60 percent (the percentage applicable under former law). The new IRRRL is for $40,000. The guaranty on the new loan is $20,000 or 50 percent, but the Veteran’s entitlement use remains at $25,000.	VA_Guidelines.txt
427cc6d6-e62b-45fe-9af4-fb62e10f83ba	Table 1: How to Calculate the Guaranty on an IRRRL by Loan Amount Loan Amount How to calculate the amount of guaranty on an IRRRL Up to $45,000 First, calculate the lesser of: · 50 percent of the IRRRL loan amount, or · the amount of guaranty used on the VA loan being refinanced.	VA_Guidelines.txt
e922b28f-4c73-428d-80b8-0de7746de333	The amount of guaranty is the greater of: · the above result, or · 25 percent of the IRRRL loan amount. $45,001 - First, calculate the lesser of: $56,250 · $22,500, or · the amount of guaranty used on the VA loan being refinanced.	VA_Guidelines.txt
19401031-b648-495f-86c6-f36b82aeb523	The amount of guaranty is the greater of: · the above result, or · 25 percent of the IRRRL loan amount. $56,251 - First, calculate the lesser of: $144,000 · 40 percent of the IRRRL loan amount, or · the amount of guaranty used on the VA loan being refinanced. The amount of guaranty is the greater of: · the above result, or · 25 percent of the IRRRL loan amount.	VA_Guidelines.txt
e64580ca-0046-4334-bfd7-0f3dd8b58cdf	Greater than Guaranty on these is always 25 percent of the IRRRL loan amount. $144,000 Continued on next page 6-5 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued i. Maximum Loan Term The maximum loan term is the original term of the VA loan being refinanced plus 10 years, but not to exceed 30 years and 32 days.	VA_Guidelines.txt
63c8b8ae-088b-4448-95f3-4357c87b10b3	For example, if the old loan was made with a 15-year term, the term of the new loan cannot exceed 25 years. j. Title/Lien Requirements The IRRRL must replace the existing VA loan as the first lien on the same property.	VA_Guidelines.txt
ca64460d-53ad-4bd2-9452-1838a2116032	Any second lienholder would have to agree to a subordinate to the first lienholder. · The borrower cannot pay off liens other than the existing VA loan from IRRRL proceeds. · The Veteran (or surviving co-obligor spouse) must still own the property. k. Who Can an IRRRL be Made to?	VA_Guidelines.txt
4472c348-ccf0-4e0f-9a1a-3141fe22f14e	Who Can an IRRRL be Made to? Generally, the party(ies) obligated on the original loan must be the same on the new loan (and the Veteran must still own the property). The lender should contact VA regarding a proposed IRRRL involving a change in obligors unless the acceptability of the IRRRL is clear. Sample cases are provided in the table in this subsection.	VA_Guidelines.txt
b8081d3d-ba71-4c41-89eb-ae02d9e1f0fe	Examples: In Case 7, the divorced spouse is keeping the home and wishes to refinance. The spouse cannot get an IRRRL unless the Veteran agrees to be obligated on the new loan and commit his or her entitlement to the new loan. A person without entitlement cannot get an IRRRL or any other type of VA loan.	VA_Guidelines.txt
277e0317-fa83-4ba9-a178-68f6123308cf	In Cases 8 through 10, the applicants cannot obtain an IRRRL because they do not include the Veteran or a person who was the Veteran’s spouse at the time the original loan was made, and who was obligated on the loan along with the Veteran.	VA_Guidelines.txt
aee3c727-4fbd-4276-9754-b6dc6ffed046	In the case of the unmarried Veteran obtaining the original loan (Case 8): · the marriage and death of the Veteran occurred after the loan was made, and · the deceased Veteran’s spouse is not obligated on the original loan. Thus, an IRRRL is not possible.	VA_Guidelines.txt
cbadd75f-20b9-41f7-81ad-786df4c832d5	Thus, an IRRRL is not possible. In the case of the Veteran and spouse obligated on the original loan (Case 9): · the divorce, remarriage, then death of the Veteran occurred after the loan was made and, · the deceased Veteran’s new spouse is not obligated on the original loan. Thus, an IRRRL is not possible.	VA_Guidelines.txt
f19b42de-a4f3-4b25-a7d6-3ef5dc43c48c	Thus, an IRRRL is not possible. In the case of the Veteran/nonveteran joint loan (Case 10): · the Veteran “sold out” to the nonveteran co-obligor after the loan was made and, · the Veteran no longer has any ownership interest in the property. Thus, an IRRRL is not possible.	VA_Guidelines.txt
4ed8889c-e98e-4c33-876f-cd59677d2145	Thus, an IRRRL is not possible. Continued on next page 6-6 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued i. Maximum Loan Term The maximum loan term is the original term of the VA loan being refinanced plus 10 years, but not to exceed 30 years and 32 days.	VA_Guidelines.txt
539c0349-ab55-45ac-b324-bca8c78151b5	For example, if the old loan was made with a 15-year term, the term of the new loan cannot exceed 25 years. j. Title/Lien Requirements The IRRRL must replace the existing VA loan as the first lien on the same property.	VA_Guidelines.txt
7155b6d0-ac6f-42ae-a8fb-352a660098a3	Any second lienholder would have to agree to a subordinate to the first lienholder. · The borrower cannot pay off liens other than the existing VA loan from IRRRL proceeds. · The Veteran (or surviving co-obligor spouse) must still own the property. k. Who Can an IRRRL be Made to?	VA_Guidelines.txt
102e1733-50ec-432e-a615-966fd01b57bb	Who Can an IRRRL be Made to? Generally, the party(ies) obligated on the original loan must be the same on the new loan (and the Veteran must still own the property). The lender should contact VA regarding a proposed IRRRL involving a change in obligors unless the acceptability of the IRRRL is clear. Sample cases are provided in the table in this subsection.	VA_Guidelines.txt
bf3fe9c2-38ca-4ee8-8cbe-d02aed3ceac2	Examples: In Case 7, the divorced spouse is keeping the home and wishes to refinance. The spouse cannot get an IRRRL unless the Veteran agrees to be obligated on the new loan and commit his or her entitlement to the new loan. A person without entitlement cannot get an IRRRL or any other type of VA loan.	VA_Guidelines.txt
083c83b1-aeb7-49d9-9000-eb0171682b9f	In Cases 8 through 10, the applicants cannot obtain an IRRRL because they do not include the Veteran or a person who was the Veteran’s spouse at the time the original loan was made, and who was obligated on the loan along with the Veteran.	VA_Guidelines.txt
ddb97551-b935-4344-b5ba-3045e466d788	In the case of the unmarried Veteran obtaining the original loan (Case 8): · the marriage and death of the Veteran occurred after the loan was made, and · the deceased Veteran’s spouse is not obligated on the original loan. Thus, an IRRRL is not possible.	VA_Guidelines.txt
77387aa8-f7ed-454d-ac28-ac548d9d8996	Thus, an IRRRL is not possible. In the case of the Veteran and spouse obligated on the original loan (Case 9): · the divorce, remarriage, then death of the Veteran occurred after the loan was made and, · the deceased Veteran’s new spouse is not obligated on the original loan. Thus, an IRRRL is not possible.	VA_Guidelines.txt
e50fe308-90a2-4976-af3d-db85c74a005b	Thus, an IRRRL is not possible. In the case of the Veteran/nonveteran joint loan (Case 10): · the Veteran “sold out” to the nonveteran co-obligor after the loan was made and, · the Veteran no longer has any ownership interest in the property. Thus, an IRRRL is not possible.	VA_Guidelines.txt
057ac0d8-8568-415f-bb63-388af3a170a3	Thus, an IRRRL is not possible. Continued on next page 6-6 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued k.	VA_Guidelines.txt
63885b93-92e5-497f-bb44-48cffcd23a7d	Who Can an IRRRL be Made to?, continued Table 2: IRRRL Scenarios Scenario Parties Obligated on Old VA Parties to be Obligated on new Is IRRRL Loan IRRRL Possible	VA_Guidelines.txt
f433d360-4df6-45f8-b373-ca9c600b213a	? 1 Unmarried Veteran Veteran and new spouse Yes 2 Veteran and spouse Divorced Veteran alone Yes 3 Veteran and spouse Veteran and different spouse Yes 4 Veteran alone Different Veteran who has Yes substituted entitlement 5 Veteran and spouse Spouse alone (Veteran died) Yes 6 Veteran and nonveteran joint loan Veteran alone Yes obligors 7 Veteran and spouse Divorced spouse alone No 8 Unmarried	VA_Guidelines.txt
58e8d5b5-b180-44db-8dea-a86a670c262e	and spouse Divorced spouse alone No 8 Unmarried Veteran Spouse alone (Veteran died) No 9 Veteran and spouse Different spouse alone (Veter No died) 10 Veteran and nonveteran joint loan Nonveteran alone No obligors l	VA_Guidelines.txt
d61f2ee2-f779-4030-a63a-5d19083ec78f	.	VA_Guidelines.txt
089375eb-5e49-4a79-acab-b0151459117b	Underwriting of IRRRLs When Obligors Have Changed Although VA does not require any credit/income documentation or re-underwriting of IRRRLs when there has been a change in obligors, lenders may want to consider the following: · Check mortgage payment record in lieu of obtaining a full credit report, unless required by investor	VA_Guidelines.txt
257a0de9-5082-434d-9e76-728883e08e10	. · For death or divorce cases, obtain a statement from the obligor(s) on the ability to make payments on the new loan without the co-obligor’s income. · Obtain a statement about the addition of a different spouse, change in number of dependents, as applicable.	VA_Guidelines.txt
2616613a-37e4-4c01-a175-f1dac607d62c	The lender should satisfy itself that the lower payment and interest rate, and the minimum 25 percent guaranty compensate for no re-underwriting on the new loan when there has been a change in obligors. m. Occupancy For IRRRLs, the Veteran or the spouse of an active servicemember must certify that he or she previously occupied the property as his or her home.	VA_Guidelines.txt
0a9d8da0-9eb7-4493-bb32-6e990949c468	This is different than the requirement for non-IRRRL VA loans that the Veteran must intend to personally occupy the property as his or her home. Reference: See chapter 3 for details. Continued on next page 6-7 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued n.	VA_Guidelines.txt
1e708db1-63c3-4a14-904e-65caf828358c	VA Loan Identification Number Request a new loan number for each IRRRL through The Appraisal System (TAS), without requesting an appraisal. o. Credit Underwriting No credit information or underwriting is required unless: · the loan to be refinanced is 30 days or more past due (see section 2 of this chapter) or, · the monthly payment (PITI) will increase 20 percent or more.	VA_Guidelines.txt
ad59e846-29bb-4d5a-8f5d-104040eda999	Reference: See subsection d of this section. A borrower with a recent Chapter 13 bankruptcy may need approval of the trustee for the new loan. p. Prior Approval Procedures An IRRRL can be closed on an automatic basis by any lender (such as, a lender with or without automatic authority to close other types of loans on an automatic basis) in any geographic location.	VA_Guidelines.txt
44e152f4-de94-4515-928f-7a699ba53d07	Exception: For IRRRLs to refinance existing VA loans 30 days or more past due, VA prior approval is needed (see Topic 2, subsection a of this chapter). A lender may choose to submit an IRRRL for prior approval, even if the existing loan is not 30 days or more past due.	VA_Guidelines.txt
b6da5692-e2b5-4634-a4db-77f17213684f	In such cases, submit only items 1 through 10 (and 17, if applicable) of the information listed under “Prior Approval Submission.” Also include an explanation of why the loan is being submitted for prior approval. Submit documents on closed prior approval IRRRLs in accordance with the instructions under Topic 2, subsection c of this chapter.	VA_Guidelines.txt
f6fbad79-e1d4-4ac8-825f-174f5c9e57ab	Note: Prior approval for IRRRLs is not required for Veterans in receipt of nonservice- connected pension or for Veterans rated incompetent by VA when these Veterans meet the requirements of this section. q.	VA_Guidelines.txt
fb580c7e-2f13-4be5-be3f-85491340b7dd	Procedures for Automatic Processing of IRRRLs An IRRRL can be closed on an automatic basis by any lender (such as, a lender with or without automatic authority to close other types of loans on an automatic basis) in any geographic location. Exception: For IRRRLs to refinance existing VA loans 30 days or more past due, VA prior approval is needed. See Topic 2, subsection a, of this chapter.	VA_Guidelines.txt
8a844f9e-e54a-4e0b-8421-640e432caad8	See Topic 2, subsection a, of this chapter. A loan must be reported (such as, all documentation submitted) to VA within 60 days of closing. A lender that fails to meet this time limit must provide a written explanation. (see document #12.) To report a loan, submit the following documents to VA in the order listed.	VA_Guidelines.txt
f8e0b4a8-56b9-4c8d-8560-9597c997e219	Continued on next page 6-8 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued q.	VA_Guidelines.txt
f27d4b62-98a2-498a-879e-e0c0d7acc6c4	Procedures for Automatic Processing of IRRRLs, continued Table 3: IRRRL Reporting Documentation Requirements Order Document 1 Lender’s cover or transmittal letter (if used). 2 VA Form 26-0286, VA Loan Summary Sheet 3 VA Form 26-8320 (or 26-8320a), Certificate of Eligibility, or a request for a duplicate certificate on VA Form 26-1880, Request for a Certificate of Eligibility	VA_Guidelines.txt

65844c11-a11b-4b79-b137-941f52d44f82

The servicer will be provided a with an NVS letter indicating VA has released the non- Veteran spouse of liability. The servicer may only charge a fee of $50 for amending its records to reflect the change. It is not necessary for the servicer to complete an ROL. For example, Mary and Jon Smith divorced after they purchased a home using Mary’s COE. She obtains the home per the divorce decree.

VA_Guidelines.txt

f939a816-42a4-4128-9fd1-d4a81568ea81

She obtains the home per the divorce decree. Since she is the Veteran and will be retaining the property, she will contact the VA RLC of jurisdiction of where the property is located to process the NVS. r. Substitution of Entitlement A Veteran may allow an assumption/ROL of his or her VA-guaranteed loan with the expectation of being able to have his or her entitlement restored.

VA_Guidelines.txt

3cb64a42-9571-4724-93cd-cc3bd9f961a0

A restoration may be needed to obtain another VA-guaranteed loan in the future by restoring the previously used entitlement for full entitlement benefits. Entitlement cannot be restored until VA makes a determination of eligibility for the Veteran assumer and Veteran seller and processes the SOE. VA completes the SOE process after a servicer closes the assumption and issues an ROL.

VA_Guidelines.txt

76c26cc5-9440-42e0-9d49-2b64c548ea7a

Questions about an SOE should be directed to the VA RLC with jurisdiction where the property is located. It is important for the servicer to obtain a COE as soon as possible in the assumption process to determine if there is sufficient entitlement for the Veteran assumer to complete the SOE for the Veteran seller. Entitlement must be of equal amounts to substitute.

VA_Guidelines.txt

532ff143-1b6b-4b2e-a0fb-a39abfafc74b

See Chapter 3 of this handbook for determination of home loan eligibility. Continued on next page 5-27 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 5: Processing Loan Assumptions by the Current Servicer or Holder of the VA Loan, continued r.

VA_Guidelines.txt

09d85033-fa12-4f20-8e1e-e2df15a05778

Substitution of Entitlement, continued When a Veteran requests approval for a transfer of ownership, he or she may request to have entitlement restored for use on another VA loan.

VA_Guidelines.txt

2d5596ba-eb8b-445c-b96a-23964f2ef0a9

For VA to approve such a request: · the assumption (ROL) must be completed and closed by the lender; · the purchaser must be an eligible Veteran who has sufficient entitlement to substitute for that of the original Veteran; · the purchaser must certify that the property securing the loan will be occupied as his or her residence; · the purchasing Veteran must agree to the SOE; and · there must be

VA_Guidelines.txt

f22e7440-133d-4c19-82ff-8ccf9579938b

must agree to the SOE; and · there must be equal available entitlement from the assuming Veteran in order to substitute his or her entitlement with the Veteran being released of their entitlement

VA_Guidelines.txt

e1493797-189e-43be-9d6b-d18e6d2c054f

.

VA_Guidelines.txt

f1eccb3a-d7fb-429c-86b7-119dae0b7d43

The assumption (ROL) must be completed and closed by the lender. The purchaser must be an eligible Veteran who has sufficient entitlement to substitute for that of the original Veteran. The purchaser must certify that the property securing the loan will be occupied as his or her residence.

VA_Guidelines.txt

6d935c24-bfd7-4067-af5b-a2db4245cdea

The purchasing Veteran must agree to the SOE, and there must be equal available entitlement from the assuming Veteran in order to substitute his or her entitlement with the Veteran being released of their entitlement.

VA_Guidelines.txt

48843e45-1a19-4324-8e48-c01a4116e1cf

Whenever two Veterans intend to follow the SOE process, the servicer should have the Veteran purchaser complete VA Form 26-8106, Statement of Veteran Assuming GI Loan, (Substitution of entitlement). It should be included in the closing package submitted to VA. A COE for each Veteran should accompany the credit package used to approve the ROL.

VA_Guidelines.txt

960c3154-e3b6-43b0-8edc-004bd994a29d

It is important to verify the purchasing Veteran has sufficient entitlement, is willing to substitute their entitlement, and will meet occupancy requirements to substitute before the closing of the ROL to meet the requirements of an SOE. s. Unrestricted Transfers Certain transfers of ownership, otherwise subject to 38 U. S. C. 3714, do not require prior approval by a holder or VA.

VA_Guidelines.txt

bc6e0f8d-8cc0-46bc-aa54-b1e96cf0138b

Loans may not be accelerated due to these types of transfers. An ROL will not be processed. Processing charges and funding fees may not be assessed. It is permissible to charge a reasonable fee up to $50 for changing the account records, provided that there is an agreement with the borrower and it is permissible under the loan agreement.

VA_Guidelines.txt

84962b5c-3217-4390-a534-8b2a53345084

Continued on next page 5-28 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 5: Processing Loan Assumptions by the Current Servicer or Holder of the VA Loan, continued s.

VA_Guidelines.txt

302150b4-efca-4d69-8b28-4b343ee4ce9d

Unrestricted Transfers, continued Servicers must report unrestricted transfers to VA through VALERI as authorized transfers of ownership, which will typically be handled automatically by their servicing systems.

VA_Guidelines.txt

3ae80449-a33e-4cde-b43d-363071ab5300

Unrestricted transfers of ownership include: · the creation of a lien or other encumbrance subordinate to the lender’s security instrument that does not relate to a transfer of rights of occupancy in the property; · the creation of a purchase money security interest for household appliances; · a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the

VA_Guidelines.txt

f86a7635-fc20-451e-b6fd-3dc43d31a099

on the death of a joint tenant or tenant by the entirety; · the granting of a leasehold interest of 3 years or less not containing an option to purchase; · a transfer to a relative resulting from the death of a borrower; · a transfer when the spouse or child of the borrower becomes a joint owner of the property with the borrower, · a transfer into an inter-vivos trust in which the borrower is and

VA_Guidelines.txt

62fda35a-72be-49be-b205-73e3278e3eda

an inter-vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; and · a transfer resulting from a decree to dissolve a marriage, legal separation agreement, or from an incidental property settlement agreement by which the spouse of the borrower becomes the sole owner of the property

VA_Guidelines.txt

4edbd2f5-687a-4fed-88a8-a891f3802797

.

VA_Guidelines.txt

8d65b858-546f-427b-ba3c-a51c8bb1ef34

VA does not consider a sale on an installment contract, contract for deed, or similar arrangement in which title is not transferred from the seller to the buyer, to be a “disposition” of property as sale agreements are not subject to 38 U. S. C. 3714. These sale agreements do not require prior approval from the servicer or VA.

VA_Guidelines.txt

fed8c1c9-4247-4d8a-9b81-fefa3671be2a

Borrowers inquiring should be cautioned that any borrower considering a sale in this manner would remain liable for repayment of the loan under such an arrangement. Continued on next page 5-29 VA Lenders Handbook 26-7 Chapter 5: How to Process VA Loans and Submit them to VA Topic 5: Processing Loan Assumptions by the Current Servicer or Holder of the VA Loan, continued t.

VA_Guidelines.txt

5345c34e-e8e3-48bc-a853-38c62c479d2a

Documentation Requirements VA does not require a servicer to change records, even if the agreement calls for the contract purchaser to make payments directly to that servicer. The contract seller is responsible for forwarding payment coupons and other information to the contract purchaser.

VA_Guidelines.txt

63014f0c-d29e-48b6-9751-ce0851feff48

Depending on the circumstances of a case, servicers may agree to change the account address to read “in care of” the contract purchaser, although the contract seller must promptly advise the servicer of any change in his or her address. Sales by installment contracts typically call for transfer of title after a certain period of time.

VA_Guidelines.txt

acfe3b87-cfa2-472d-9296-7e5d9db6f204

If the contract calls for title to transfer prior to payment in full of the VA loan, VA requires assumption approval according to the procedures previously discussed. Processing charges and VA funding fees will be applicable upon transfer.

VA_Guidelines.txt

10b33689-9d54-4814-8d90-04fcd889f201

As one of the conditions of the contract, servicers should advise the borrower that the language stating an application for assumption approval will be made, and approval secured, prior to the completion of title transfer. The contract should address the options of both parties if the request for assumption approval is denied.

VA_Guidelines.txt

60b5b1a6-4acf-4e55-8643-5eb770b7cfa6

Servicers are required to retain the supporting documentation for all transfers, assumptions, and releases of liability for at least 3 years from approval or denial.

VA_Guidelines.txt

af134daa-830f-4553-bef4-ccf0ad41a512

An assumption package should be submitted to the RLC of jurisdiction of where the property is located

VA_Guidelines.txt

8a54cced-0480-440c-848e-1d44e0ed9fb7

. 5-30 CHAPTER 6: REFINANCING LOANS Overview Topic Title Page 1 Interest Rate Reduction Refinancing Loans (IRRRLs) 6-2 2 IRRRL Made to Refinance a Delinquent Loan 6-10 3 Cash-Out Refinancing Loans 6-13 4 Quick Reference Table for IRRRLs Versus Cash-Out Refinancing Loans 6-26 5 Other Refinancing Loans 6-28 6-1 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction

VA_Guidelines.txt

693b5a84-38e0-4e5d-aeb1-d9c1ab943166

Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs) Change Date: April 10, 2009 · This section has been changed to update hyperlinks and to make minor grammatical edits

VA_Guidelines.txt

d9a9363e-fb7e-4886-abf7-7c4636ac2ec4

. a.

VA_Guidelines.txt

0ea53574-6725-4798-9752-a8336e1639a9

What is an IRRRL? An IRRRL is a VA-guaranteed loan made to refinance an existing VA-guaranteed loan, generally at a lower interest rate than the existing VA loan, and with lower principal and interest payments than the existing VA loan. Generally, no appraisal, credit information or underwriting is required on an IRRRL, and any lender may close an IRRRL automatically.

VA_Guidelines.txt

416cfe5a-5cc6-4e81-ac5a-b4c303fb612e

Note: Exceptions and specific requirements are explained in the remainder of this section. b. Interest Rate Decrease Requirement An IRRRL (which can be a fixed rate, hybrid Adjustable Rate Mortgage (ARM) or traditional ARM) must bear a lower interest rate than the loan it is refinancing unless the loan it is refinancing is an ARM. c.

VA_Guidelines.txt

a399ecf0-260d-421e-abc3-85a9ccada12f

Payment Decrease/Increase Requirements The principal and interest payment on an IRRRL must be less than the principal and interest payment on the loan being refinanced unless one of the following exceptions applies: · the IRRRL is refinancing an ARM, · term of the IRRRL is shorter than the term of the loan being refinanced, or · energy efficiency improvements are included in the IRRRL.

VA_Guidelines.txt

186433a6-7df0-4547-892a-ae3676392485

A significant increase in the Veteran’s monthly payment may occur with any of these three exceptions, especially if combined with one or more of the following: · financing of closing costs, · financing of up to two discount points, · financing of the funding fee, and/or · higher interest rate when an ARM is being refinanced.

VA_Guidelines.txt

e16fe974-734e-4139-b427-14d260f3d9fe

If the monthly payment (PITI) increases by 20 percent or more, the lender must: · determine that the Veteran qualifies for the new payment from an underwriting standpoint; such as, determine whether the borrower can support the proposed shelter expense and other recurring monthly obligations in light of income established as stable and reliable, and · include a certification that the Veteran

VA_Guidelines.txt

fbda5c07-7605-448d-9b0c-658686b314ff

and · include a certification that the Veteran qualifies for the new monthly payment which exceeds the previous payment by 20 percent or more

VA_Guidelines.txt

8613bf2d-536d-48ce-a806-378f6283b3e6

.

VA_Guidelines.txt

2220b676-a759-44cf-9266-b12cc43dc64a

Continued on next page 6-2 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued d. Veteran’s Statement and Lender’s Certification For all IRRRLs, the Veteran must sign a statement acknowledging the effect of the refinancing loan on the Veteran’s loan payments and interest rate.

VA_Guidelines.txt

bb91337c-8c94-4558-bb98-d7a7db493b6c

The statement must show the interest rate and monthly payments for the new loan versus that for the old loan. The statement must also indicate how long it would take to recoup ALL closing costs (both those included in the loan and those paid outside of closing).

VA_Guidelines.txt

686d05b7-7342-4954-a71c-787c5b7769bd

If the monthly payment (PITI) increases by 20 percent or more, the lender must include a certification that the Veteran qualifies for the new monthly payment which exceeds the previous payment by 20 percent or more.

VA_Guidelines.txt

803259e1-cb97-4697-964d-2b640253b2fb

Example: · Vet’s monthly payment decreases by $50.00. · Vet pays $5,000 in closing costs (includes all costs – closing costs, funding fee, discounts, etc). · Recoup closing costs in 100 months - $5,000 divided by $50. Note: This would not be required in those limited cases where the payment is not decreasing (reduced term of loan, etc.).

VA_Guidelines.txt

f6ce187c-c473-43cb-968c-3e0c22c8e6ed

The Veteran’s statement may be combined with the lender’s certification and should be on the lender’s own letterhead. For a sample please go to: Sample VA Rate Reduction Certification. e. What Closing Costs can be Included in the Loan?

VA_Guidelines.txt

804ec6d0-633d-4758-8aef-02ad5783a798

What Closing Costs can be Included in the Loan? The following fees and charges may be included in an IRRRL: · the VA funding fee, and · any allowable fees and charges discussed in section 2 of chapter 8; such as, all allowable closing costs, including the lender’s flat charge.

VA_Guidelines.txt

9b15ed5b-668f-4045-9008-ff7e41840fb6

Limitation on closing costs that can be included: · While the borrower may pay any reasonable amount of discount points in cash, only up to two discount points can be included in the loan amount

VA_Guidelines.txt

d6a2677d-0c33-4900-9f67-9a79165f7a2a

. · Although VA does not require an appraisal or credit underwriting on IRRRLs, any customary and reasonable credit report or appraisal expense incurred by a lender to satisfy its lending requirements may be charged to the borrower and included in the loan

VA_Guidelines.txt

b0c794ad-610c-4523-937f-cca772e5822a

. · The lender may also set the interest rate on the new loan high enough to enable the lender to pay all closing costs, as long as the requirements for lower interest rate and payments (or one of the exceptions to those requirements) are met

VA_Guidelines.txt

ecc4f4f0-9483-4095-a0b0-b43856eb2616

. · For IRRRLs to refinance loans 30 days or more past due (which must be submitted for prior approval), the following can be included in the new loan: • late payments and late charges on the old loan, and • reasonable costs if legal action to terminate the old loan has commenced.

VA_Guidelines.txt

796e36fc-74eb-4998-8f3f-7d5ed33629ab

Continued on next page 6-3 Continued on next page 6-3 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued f. When Can the Borrower Receive Cash at Closing? An IRRRL cannot be used to take equity out of the property or pay off debts, other than the VA loan being refinanced.

VA_Guidelines.txt

8209d804-5427-4259-8aca-6d432d23c3b2

Loan proceeds may only be applied to paying off the existing VA loan and to the costs of obtaining or closing the IRRRL. Therefore, the general rule is that the borrower cannot receive cash proceeds from the loan. If necessary, the refinancing loan amount must be rounded down to avoid payments of cash to the Veteran.

VA_Guidelines.txt

05aaec8f-c4c5-472b-9f0a-a0194d4f35a3

The one exception is reimbursement of the Veteran for the cost of energy efficiency improvements up to $6,000 completed within the 90 days immediately preceding the date of loan closing. Note: Use of loan proceeds for energy efficiency improvements not involving cash reimbursement of the Veteran is also an option. See chapter 7.

VA_Guidelines.txt

9aba71f2-e06d-4a71-ad60-6fd736a63228

See chapter 7. In a limited number of situations, the borrower may receive cash at closing. Some examples of situations in which VA does not object to the borrower receiving cash are: · computational errors, · changes in final pay-off figures, · up-front fees paid for the appraisal and/or credit report that are later added into the loan, and · refund of the escrow balance on the old loan.

VA_Guidelines.txt

7d13dc14-d334-4fb5-8530-5b83f823940b

This often occurs when a party other than the present holder originates the loan. VA does not set a “ceiling” or a specific dollar limitation on cash refunds resulting from adjustments at closing. However, if a situation involves a borrower receiving more than $500, consult VA as to its acceptability.

VA_Guidelines.txt

87762318-c553-49e5-8080-103d5abb3d77

Lenders and VA personnel should exercise common sense when assessing such situations and draw from basic program information to know the difference between an equity withdrawal and cash from unforeseen circumstances. g. Maximum Loan Always use VA Form 26-8923, IRRRL Worksheet, to calculate the maximum loan amount.

VA_Guidelines.txt

cc0b09a5-49e4-4bbd-8196-f266f338704b

The maximum loan amount is the existing VA loan balances plus the following: · including any late payments* and late charges, plus · allowable fees and charges (includes up to two discount points), plus · the cost of any energy efficiency improvements, and · the VA funding fee

VA_Guidelines.txt

c3d5931e-8f44-4e34-a36e-825a3eb0aeb8

. *Any IRRRL that includes delinquent payments in the loan amount must be submitted for prior approval, even when a lender has automatic authority.

VA_Guidelines.txt

1f6d076a-5a71-411e-a55b-253f895625dc

Note: There is no maximum dollar amount for VA loans. Since an IRRRL rolls the above items into the new loan and VA guarantees at least 25 percent of the loan amount (without regard to the Veteran’s entitlement), the new loan amount may be more than the limits established by the secondary market. It is the lender’s responsibility to ensure it has a marketable loan.

VA_Guidelines.txt

2c468803-c6e7-469d-8cec-e23f5417dd61

Continued on next page 6-4 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued h.

VA_Guidelines.txt

5916376a-b7cd-4489-b8d3-8b5a78b4cc7e

Amount of Guaranty and Entitlement Use No additional charge is made to the Veteran’s entitlement for an IRRRL; such as, the amount of the Veteran’s previously used and available entitlement remains the same before and after obtaining the IRRRL. The new IRRRL loan amount may be equal to, greater than, or less than, the original amount of the loan being refinanced.

VA_Guidelines.txt

b82f1dc8-6059-4f4a-9a73-0580e385eb8b

This may impact the amount of guaranty on the new loan, but not the Veteran’s use of entitlement. Example Of New Loan Amount More Than Old Loan The existing VA loan was originally made for $110,000 with a guaranty of $27,500, or 25 percent. The new IRRRL is for $112,000. The guaranty on the new loan is $28,000 or 25 percent, but the Veteran’s entitlement use remains at $27,500.

VA_Guidelines.txt

30cca602-3d5e-4210-9f00-f0f083ee46fc

Example Of New Loan Amount Less Than Old Loan The existing VA loan was originally made for $42,000 with a guaranty of $25,000, or almost 60 percent (the percentage applicable under former law). The new IRRRL is for $40,000. The guaranty on the new loan is $20,000 or 50 percent, but the Veteran’s entitlement use remains at $25,000.

VA_Guidelines.txt

427cc6d6-e62b-45fe-9af4-fb62e10f83ba

Table 1: How to Calculate the Guaranty on an IRRRL by Loan Amount Loan Amount How to calculate the amount of guaranty on an IRRRL Up to $45,000 First, calculate the lesser of: · 50 percent of the IRRRL loan amount, or · the amount of guaranty used on the VA loan being refinanced.

VA_Guidelines.txt

e922b28f-4c73-428d-80b8-0de7746de333

The amount of guaranty is the greater of: · the above result, or · 25 percent of the IRRRL loan amount. $45,001 - First, calculate the lesser of: $56,250 · $22,500, or · the amount of guaranty used on the VA loan being refinanced.

VA_Guidelines.txt

19401031-b648-495f-86c6-f36b82aeb523

The amount of guaranty is the greater of: · the above result, or · 25 percent of the IRRRL loan amount. $56,251 - First, calculate the lesser of: $144,000 · 40 percent of the IRRRL loan amount, or · the amount of guaranty used on the VA loan being refinanced. The amount of guaranty is the greater of: · the above result, or · 25 percent of the IRRRL loan amount.

VA_Guidelines.txt

e64580ca-0046-4334-bfd7-0f3dd8b58cdf

Greater than Guaranty on these is always 25 percent of the IRRRL loan amount. $144,000 Continued on next page 6-5 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued i. Maximum Loan Term The maximum loan term is the original term of the VA loan being refinanced plus 10 years, but not to exceed 30 years and 32 days.

VA_Guidelines.txt

63c8b8ae-088b-4448-95f3-4357c87b10b3

For example, if the old loan was made with a 15-year term, the term of the new loan cannot exceed 25 years. j. Title/Lien Requirements The IRRRL must replace the existing VA loan as the first lien on the same property.

VA_Guidelines.txt

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Any second lienholder would have to agree to a subordinate to the first lienholder. · The borrower cannot pay off liens other than the existing VA loan from IRRRL proceeds. · The Veteran (or surviving co-obligor spouse) must still own the property. k. Who Can an IRRRL be Made to?

VA_Guidelines.txt

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Who Can an IRRRL be Made to? Generally, the party(ies) obligated on the original loan must be the same on the new loan (and the Veteran must still own the property). The lender should contact VA regarding a proposed IRRRL involving a change in obligors unless the acceptability of the IRRRL is clear. Sample cases are provided in the table in this subsection.

VA_Guidelines.txt

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Examples: In Case 7, the divorced spouse is keeping the home and wishes to refinance. The spouse cannot get an IRRRL unless the Veteran agrees to be obligated on the new loan and commit his or her entitlement to the new loan. A person without entitlement cannot get an IRRRL or any other type of VA loan.

VA_Guidelines.txt

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In Cases 8 through 10, the applicants cannot obtain an IRRRL because they do not include the Veteran or a person who was the Veteran’s spouse at the time the original loan was made, and who was obligated on the loan along with the Veteran.

VA_Guidelines.txt

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In the case of the unmarried Veteran obtaining the original loan (Case 8): · the marriage and death of the Veteran occurred after the loan was made, and · the deceased Veteran’s spouse is not obligated on the original loan. Thus, an IRRRL is not possible.

VA_Guidelines.txt

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Thus, an IRRRL is not possible. In the case of the Veteran and spouse obligated on the original loan (Case 9): · the divorce, remarriage, then death of the Veteran occurred after the loan was made and, · the deceased Veteran’s new spouse is not obligated on the original loan. Thus, an IRRRL is not possible.

VA_Guidelines.txt

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Thus, an IRRRL is not possible. In the case of the Veteran/nonveteran joint loan (Case 10): · the Veteran “sold out” to the nonveteran co-obligor after the loan was made and, · the Veteran no longer has any ownership interest in the property. Thus, an IRRRL is not possible.

VA_Guidelines.txt

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Thus, an IRRRL is not possible. Continued on next page 6-6 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued i. Maximum Loan Term The maximum loan term is the original term of the VA loan being refinanced plus 10 years, but not to exceed 30 years and 32 days.

VA_Guidelines.txt

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For example, if the old loan was made with a 15-year term, the term of the new loan cannot exceed 25 years. j. Title/Lien Requirements The IRRRL must replace the existing VA loan as the first lien on the same property.

VA_Guidelines.txt

7155b6d0-ac6f-42ae-a8fb-352a660098a3

Any second lienholder would have to agree to a subordinate to the first lienholder. · The borrower cannot pay off liens other than the existing VA loan from IRRRL proceeds. · The Veteran (or surviving co-obligor spouse) must still own the property. k. Who Can an IRRRL be Made to?

VA_Guidelines.txt

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Who Can an IRRRL be Made to? Generally, the party(ies) obligated on the original loan must be the same on the new loan (and the Veteran must still own the property). The lender should contact VA regarding a proposed IRRRL involving a change in obligors unless the acceptability of the IRRRL is clear. Sample cases are provided in the table in this subsection.

VA_Guidelines.txt

bf3fe9c2-38ca-4ee8-8cbe-d02aed3ceac2

Examples: In Case 7, the divorced spouse is keeping the home and wishes to refinance. The spouse cannot get an IRRRL unless the Veteran agrees to be obligated on the new loan and commit his or her entitlement to the new loan. A person without entitlement cannot get an IRRRL or any other type of VA loan.

VA_Guidelines.txt

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In Cases 8 through 10, the applicants cannot obtain an IRRRL because they do not include the Veteran or a person who was the Veteran’s spouse at the time the original loan was made, and who was obligated on the loan along with the Veteran.

VA_Guidelines.txt

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In the case of the unmarried Veteran obtaining the original loan (Case 8): · the marriage and death of the Veteran occurred after the loan was made, and · the deceased Veteran’s spouse is not obligated on the original loan. Thus, an IRRRL is not possible.

VA_Guidelines.txt

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Thus, an IRRRL is not possible. In the case of the Veteran and spouse obligated on the original loan (Case 9): · the divorce, remarriage, then death of the Veteran occurred after the loan was made and, · the deceased Veteran’s new spouse is not obligated on the original loan. Thus, an IRRRL is not possible.

VA_Guidelines.txt

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Thus, an IRRRL is not possible. In the case of the Veteran/nonveteran joint loan (Case 10): · the Veteran “sold out” to the nonveteran co-obligor after the loan was made and, · the Veteran no longer has any ownership interest in the property. Thus, an IRRRL is not possible.

VA_Guidelines.txt

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Thus, an IRRRL is not possible. Continued on next page 6-6 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued k.

VA_Guidelines.txt

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Who Can an IRRRL be Made to?, continued Table 2: IRRRL Scenarios Scenario Parties Obligated on Old VA Parties to be Obligated on new Is IRRRL Loan IRRRL Possible

VA_Guidelines.txt

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? 1 Unmarried Veteran Veteran and new spouse Yes 2 Veteran and spouse Divorced Veteran alone Yes 3 Veteran and spouse Veteran and different spouse Yes 4 Veteran alone Different Veteran who has Yes substituted entitlement 5 Veteran and spouse Spouse alone (Veteran died) Yes 6 Veteran and nonveteran joint loan Veteran alone Yes obligors 7 Veteran and spouse Divorced spouse alone No 8 Unmarried

VA_Guidelines.txt

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and spouse Divorced spouse alone No 8 Unmarried Veteran Spouse alone (Veteran died) No 9 Veteran and spouse Different spouse alone (Veter No died) 10 Veteran and nonveteran joint loan Nonveteran alone No obligors l

VA_Guidelines.txt

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.

VA_Guidelines.txt

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Underwriting of IRRRLs When Obligors Have Changed Although VA does not require any credit/income documentation or re-underwriting of IRRRLs when there has been a change in obligors, lenders may want to consider the following: · Check mortgage payment record in lieu of obtaining a full credit report, unless required by investor

VA_Guidelines.txt

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. · For death or divorce cases, obtain a statement from the obligor(s) on the ability to make payments on the new loan without the co-obligor’s income. · Obtain a statement about the addition of a different spouse, change in number of dependents, as applicable.

VA_Guidelines.txt

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The lender should satisfy itself that the lower payment and interest rate, and the minimum 25 percent guaranty compensate for no re-underwriting on the new loan when there has been a change in obligors. m. Occupancy For IRRRLs, the Veteran or the spouse of an active servicemember must certify that he or she previously occupied the property as his or her home.

VA_Guidelines.txt

0a9d8da0-9eb7-4493-bb32-6e990949c468

This is different than the requirement for non-IRRRL VA loans that the Veteran must intend to personally occupy the property as his or her home. Reference: See chapter 3 for details. Continued on next page 6-7 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued n.

VA_Guidelines.txt

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VA Loan Identification Number Request a new loan number for each IRRRL through The Appraisal System (TAS), without requesting an appraisal. o. Credit Underwriting No credit information or underwriting is required unless: · the loan to be refinanced is 30 days or more past due (see section 2 of this chapter) or, · the monthly payment (PITI) will increase 20 percent or more.

VA_Guidelines.txt

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Reference: See subsection d of this section. A borrower with a recent Chapter 13 bankruptcy may need approval of the trustee for the new loan. p. Prior Approval Procedures An IRRRL can be closed on an automatic basis by any lender (such as, a lender with or without automatic authority to close other types of loans on an automatic basis) in any geographic location.

VA_Guidelines.txt

44e152f4-de94-4515-928f-7a699ba53d07

Exception: For IRRRLs to refinance existing VA loans 30 days or more past due, VA prior approval is needed (see Topic 2, subsection a of this chapter). A lender may choose to submit an IRRRL for prior approval, even if the existing loan is not 30 days or more past due.

VA_Guidelines.txt

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In such cases, submit only items 1 through 10 (and 17, if applicable) of the information listed under “Prior Approval Submission.” Also include an explanation of why the loan is being submitted for prior approval. Submit documents on closed prior approval IRRRLs in accordance with the instructions under Topic 2, subsection c of this chapter.

VA_Guidelines.txt

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Note: Prior approval for IRRRLs is not required for Veterans in receipt of nonservice- connected pension or for Veterans rated incompetent by VA when these Veterans meet the requirements of this section. q.

VA_Guidelines.txt

fb580c7e-2f13-4be5-be3f-85491340b7dd

Procedures for Automatic Processing of IRRRLs An IRRRL can be closed on an automatic basis by any lender (such as, a lender with or without automatic authority to close other types of loans on an automatic basis) in any geographic location. Exception: For IRRRLs to refinance existing VA loans 30 days or more past due, VA prior approval is needed. See Topic 2, subsection a, of this chapter.

VA_Guidelines.txt

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See Topic 2, subsection a, of this chapter. A loan must be reported (such as, all documentation submitted) to VA within 60 days of closing. A lender that fails to meet this time limit must provide a written explanation. (see document #12.) To report a loan, submit the following documents to VA in the order listed.

VA_Guidelines.txt

f8e0b4a8-56b9-4c8d-8560-9597c997e219

Continued on next page 6-8 VA Lenders Handbook M26-7 Chapter 6: Refinancing Loans Topic 1: Interest Rate Reduction Refinancing Loans (IRRRLs), continued q.

VA_Guidelines.txt

f27d4b62-98a2-498a-879e-e0c0d7acc6c4

Procedures for Automatic Processing of IRRRLs, continued Table 3: IRRRL Reporting Documentation Requirements Order Document 1 Lender’s cover or transmittal letter (if used). 2 VA Form 26-0286, VA Loan Summary Sheet 3 VA Form 26-8320 (or 26-8320a), Certificate of Eligibility, or a request for a duplicate certificate on VA Form 26-1880, Request for a Certificate of Eligibility

VA_Guidelines.txt