VA Overview (revised 7/20/2015)

Transcription

1 VA Overview (revised 7/20/2015) 1

2 AFR Disclaimer At minimum, all VA must be met. The VA Web Automated Reference Material System (WARMS)can be found here: The AFR underwriter has the right to decline or suspend the file at their sole discretion for any reason allowed by law. These materials are intended for AFR internal use and client training procedures only. This is neither legal advice nor a substitute for Agency Guidelines/AFR investor overlays. Please do not reproduce, display, or distribute without the express written permission of AFR. This information is subject to change in AFR s sole discretion. Updated AFR guidelines may be accessed by: All rights reserved. 2

3 Table of Contents AFR Overlays Wholesale Set Up Hard Stops Underwriting Method Borrower Eligibility Certificate of Eligibility & Entitlement Calculations Funding Fee (FF) Credit Income Assets Loan Identification Number (LIN) Eligible Properties & Appraisals Eligible Programs & Terms VA Allowable & Non-Allowable Fees 20 Q&A s on VA Loans Helpful Resources 3

4 AFR Overlays 620 minimum qualifying credit score. 2 credit scores are required. Lowest representative score from all borrowers will be used for qualification purposes. *See VA IRRRL LTV chart for FICO, LTV restrictions, reserves, and housing history requirements IRRRLs require an AVM. You can submit with an AVM from our list of approved companies and pay for it yourself or The AVM is pulled and paid for by AFR. Owner Occupied properties only (with the exception of IRRRLs) 1-2 Unit Primary Residences, VA approved condos, PUDs, Manufactured Housing AUS Approve/Eligible Manual underwrites also available. Gift funds are acceptable from immediate family members ONLY No new subordinate financing allowed Escrow waivers are not permitted Any purchase where the seller is an LLC or Corporation and/or title shows no mortgages or liens being paid off, AFR will require a VOD that is required and verified by AFR. Borrower may own a maximum of 4 financed properties 4

5 Age of Documents Appraisal: 120 days CPL: 60 days Certificate of Eligibility: 360 days Credit: 75 days to submission, 120 to closing Income/Assets: 120 days RESPA Documents: 120 days Title: 90 days Note: TX and LA 60 days Verbal Verification of Employment: 10 days within closing to be performed by AFR 5

6 Set Up HARDSTOPS VA Agent Approval TPO-C clients must have VA Agent Approval to send AFR VA loans under our VA Sponsorship. The VA box must be checked off and Notes must reflect VA approval from Broker Services prior to a file being scrubbed! VA loans cannot be worked on without this agent approval. See next slide for screenshot of VA Approval in Data Trac. Note: The current turn time for an agent approval from VA is 3-4 weeks from the point the client (TPO-C) has submitted the required paperwork and $100 check made payable to AFR. Certificate of Eligibility (COE) a COE must be in EVERY file!!! If the COE shows Contact RLC (Regional Loan Center) the scrubber must have the broker obtain the COE showing Exempt or Non-Exempt Status prior to proceeding with the file. See separate COE Power Point Presentation. Funding Fee (FF) The funding fee must be disclosed accurately in Block 3 of the GFE and included in the 10% RESPA tolerance calculations. The COE will reflect the appropriate funding fee. The funding fee, once determined, must also be entered accurately in Data Trac to calculate the correct loan amount. See the Funding Fee Matrix in the separate COE Power Point Presentation. Purchase Agreements ALL VA Purchases must have a fully executed legible purchase agreement in the file at the time of the file being accepted by AFR. Appraisals An appraisal should not be in a file for TPO-C client codes. Note: If a client code TPO-C submitted an appraisal the scrubber must verify through WebLGY that the appraisal is in the name of an VA Automatic Lender. The scrubber must note Data Trac for the AFR VA UW to have the appraisal and LIN# to transferred AFR. 6

7 Underwriting Method DU & LP (w/the exception of No-Income Qualifying IRRRLs) Approve/Eligible Manual Underwriting (Refers) Permitted Note: No-Income /Credit Qualifying IRRRLs require a FNMA 3.2. Files submitted with a TOTAL Scorecard (DU) on these loans cannot be accepted by AFR. Note: If both LP and DU AUS findings come back with a Refer risk classification, the loanmust be submitted to AFR s Credit Committee for an exception. 7

8 Borrower Eligibility 8

9 Basic Eligibility Requirements A veteran is eligible for VA home loan benefits if he or she served on active duty in the Army, Navy, Air Force, Marine Corps, or Coast Guard after September 15, 1940, and was discharged under conditions other than dishonorable after either: 90 days or more, any part of which occurred during wartime, or 181 continuous days or more (peacetime). 2 year requirement: A greater length of service is required for veterans who: Enlisted (and service began) after September 7, 1980, or Enlisted service as an officer after October 16, These veterans must have completed either: 24 continuous months of active duty, or The full period for which called or ordered to active duty, but not less than 90 days (any part during wartime) or 181 continuous days (peacetime). 9

10 Eligibility for Reserves and National Guard Members of the Reserves and National Guard who are not otherwise eligible for loan guaranty benefits are eligible upon completion of 6 years service in the Reserves or Guard (unless released earlier due to a service-connected disability). The applicant must have received an honorable (a general or under honorable conditions is not qualifying) discharge from such service unless he or she is either: in an inactive status awaiting final discharge, or still serving in the Reserves or Guard. 10

11 Eligibility for Spouses of Veterans Some spouses of veterans may have home loan eligibility. They are: the unmarried surviving spouse of a veteran who died as a result of service or serviceconnected causes, the surviving spouse of a veteran who dies on active duty or from service-connected causes, who remarries on or after age 57 and on or after December 16, 2003, and the spouse of an active duty member who is listed as MIA or a POW for at least 90 days. Eligibility under this MIA/POW provision is limited to onetime use only. surviving spouses of veterans who died from non-service connected causes may also be eligible if certain conditions are met. Those conditions are: the veteran was rated totally disabled for 10 years or more immediately preceding death; or was rated totally disabled for not less than 5 years from date of discharge or release from active duty to date of death, or the veteran was a former POW who died after September 30, 1999, and was rated totally disabled for not less than 1 year immediately preceding death. 11

12 Wartime and Peacetime Wartime Peacetime World War II 9/16/1940-7/25/1947 Korean conflict 6/27/1950-1/31/1955 Vietnam Era 8/5/1964-5/7/1965 (The Vietnam Era begins 2/28/1961 for those individuals who served in the Republic of Vietnam) Post World War II period 7/26/1947 6/26/1950 Post Korean period 2/1/1955-8/4/1964 Post Vietnam period 5/8/1975-8/1/1990 Persian Gulf War 8/2/1990 date to be determined 12

13 Certificate of Eligibility & Entitlement Calculations 13

14 Certificate of Eligibility (COE) Eligibility means the veteran meets the basic criteria of appropriate length and character of service to utilize the home loan benefit. Before processing and closing a loan for an applicant, the client (broker) must ensure the applicant is an eligible veteran. Veteran home loan eligibility is proven with the COE. A COE is the only reliable Proof of Eligibility for the home loan benefit. Note: Although eligible for the home loan benefit, veterans must still qualify based on income and credit before loan approval is granted. The client (broker) must use VA s online application to attempt to obtain the COE//Go to VA s Information Portal//Select WebLGY//Select Eligibility//Follow prompts. Note: If the COE cannot be obtained immediately, select the electronic application link. Veterans may also apply for a COE online at 14

15 Certificate of Eligibility (COE) Surviving Spouses: If applying for the first time, surviving spouses must completed VA Form , instead of VA Form Surviving Spouse COEs are not issued via an automated COE. In order to obtain a Surviving Spouse COE an electronic application is required. The client must upload a completed VA Form and supporting documentation into WebLGY, and complete the electronic application. Note: **AFR will not accept any loan without the COE reflecting the funding fee as either EXEMPT or NON EXEMPT. The COE must be in the file at the time of submission to the registration department. 15

16 Certificate of Eligibility (COE) The COE will confirm: The amount of entitlement (see Entitlement slide), and The funding fee (ff) exemption status (Exempt, Non Exempt or Contact RLC) Note: Regardless of the new Funding Fee (FF) status shown on the COE, lenders must be sure to read any and all statements appearing the Conditions field, which appears near the middle portion of the COE. 16

17 Certificate of Eligibility (COE) There are three types of certificate of eligibility: Veteran Annotated for Unmarried Surviving Spouse Reservist/ National Guard A different funding fee applies for each type of COE and whether or not the VA benefits has been used previously. 17

18 All VA transactions, excluding the VA IRRRLs, require a Certificate of Eligibility in order to determine that the veteran is eligible for a VA home loan benefit at time of underwrite. Although eligible for the home loan benefit, veterans still must qualify based on income and credit before a loan approval is granted. 18

19 Entitlement Entitlement is the amount available for use on a loan. The amount of available basic entitlement is $36,000. This may be reduced if the Veteran has used entitlement before which has not been restored. For example it may say: THIS VETERAN'S BASIC ENTITLEMENT IS $. TOTAL ENTITLEMENT CHARGED TO PREVIOUS VA LOANS IS $. For certain loans in excess of $144,000, additional entitlement may be available. For loans greater than $144,000, but less than $417,000, the maximum entitlement is 25% of $417,000, which equals $104,250. For loans greater than $417,000, the maximum entitlement is 25% of the appropriate loan limit which can vary by county, visit the VA Loan Limits webpage. Please note county limits can change yearly. VA will post limits each year on the website as they change. Even though the veteran may have entitlement for certain loans greater than $144,000, the COE will never reflect this potential extra entitlement. Instead, an asterisk by the word available refers to a note, which explains the possibility of additional entitlement. If the Veteran previously used entitlement, which has not been restored, available entitlement is reduced by the amount used on the prior loan(s). The lender has two options: Make the loan knowing that VA's guaranty is limited to the amount of available entitlement, or Have the veteran apply for restoration of previously used entitlement Note: The possible additional entitlement for certain loans in excess of $144,000 may be available even if the veteran has no entitlement or partial basic entitlement. However, in such cases, the lack of full entitlement may result in lenders receiving less than a 25% guaranty from VA. It is the lender's responsibility to ensure they receive a sufficient amount of guaranty to satisfy secondary market requirements. 19

20 Although VA s does not have a minimum guaranty amount and normally does grant a 25% guaranty, there may be times depending on the borrower s eligibility where the loan may not obtain a 25% guaranty from VA. AFR Secondary Requires 25% VA Guaranty on all VA loans. 20

21 How does VA s guaranty work? Basic Entitlement: $36,000 $36,000 x 4 = $144,000 *Loan amounts from $-0- to $144,000 Additional Entitlement*: $68250 $36,000 + $68250 = $104,250 $104,250 x 4 = $417,000 *Loan Amounts from $144,001 to $417,000 *The additional entitlement is not available for cash-out refinance loans. Only the basic entitlement may be used * Loan limits: loan_limits.asp VA will issue a guaranty of 25% up to the county limit. 21

22 VA Guaranty Calculation Examples The following examples illustrate some common situations involving VA-guaranteed loans. Due to variations in the amount of entitlement available to an individual veteran, loan limits for individual counties, and purchase prices for homes, situations may arise which are not covered here. Example 1 Veteran has full entitlement available and is purchasing home for $300,000 where the county loan limit is $417,000. $417,000 x 25% = $104,250 maximum guaranty and available entitlement $300,000 x 25% = $75,000 guaranty and down payment combination required Since VA s guaranty is limited to the lesser of 25% of the county loan limit or 25% of the loan amount, VA will guaranty $75,000 on the veteran s $300,000 loan in this county. A down payment should not be required. Example 2 Veteran has used $48,000 entitlement on a prior loan, which may not be restored, and is purchasing a home for $320,000 where the county loan limit is $625,000. $625,000 x 25% = $156,250 maximum guaranty $156,250 - $48,000= $108,250 entitlement available $108,250 x 4= $433,000 maximum loan amount with 25% guaranty Since the proposed loan amount will be less than $433,000, the lender will receive 25% VA guaranty on the loan $320,000. A Down payment should not be required. 22

23 VA Guaranty Calculation Examples Example 3 Veteran has full entitlement available and is purchasing a home for $480,000 where the county loan limit is $417,000. $417,000 x 25% = $104,250 maximum guaranty and entitlement available $104,250/$480,000= 21.72% guaranty Since VA s guaranty will be less than 25%, a down payment will be required. $480,000 x 25% = $120,000 $120,000 - $104,250= $15,750 down payment Example 4 Veteran has used $27,500 of entitlement on a prior loan, which may not be restored, and is purchasing a home for $320,000 where the county loan limit is $417,000. $417,000 x 25% = $104,250 maximum guaranty $104,250 - $27500= $76,750 entitlement available $76,750/ $320,000= 23.98% guaranty $76,750 x 4= $307,000 maximum loan amount with 25% guaranty Since VA s guaranty will be less than 25%, a down payment will be required. $320,000 x 25% = $80,000 $80,000 - $76,750= $3,250 down payment 23

24 Entitlement Calculation Examples 24

25 Funding Fee 25

26 Funding Fee In order to defray the cost of administering the VA Home Loan program, each veteran must pay a funding fee to VA at loan closing. Congress may periodically change the funding fee rates to reflect changes in the cost of administering the program, or to assist a certain class of veterans. May be paid in cash or financed as part of the Mortgage The COE (or VA form ) will be used to document if the veteran is exempt from the funding fee If there is proof that the borrower is an unmarried surviving spouse of the Veteran, the spouse is exempt from paying the funding fee Amount charged based on LTV, Veteran status, transaction type, or prior use. Refer to the VA Lender's Handbook for guidance 26

27 Funding Fee Matrix First Time Use Subsequent Use Veteran Reservist/NG Veteran Reservist/NG *Cash - Out Refinance 2.15% 2.40% 3.30%** 3.30%** 0% down payment 2.15% 2.40% 3.30%** 3.30%** % down payment 1.50% 1.75% 1.50% 1.75% 10 + % down payment 1.25% 1.50% 1.25% 1.50% IRRLs 0.5% 0.5% 0.5% 0.5% * Cash-out factors apply regardless of LTV * Rate and Term Refinances use the same chart as the Cash-Out Refinance * There are no reduced funding fees for regular refinances based on equity. Reduced fees only apply to purchase loans where a downpayment of at least 5% is made. ** The higher subsequent use fee does not apply to these loans if the veteran s only prior use of entitlement was for a manufactured home loan. 27

28 Who is Exempt from Paying The Funding Fee The following persons are exempt from paying the funding fee: Veterans receiving VA compensation for service-connected disabilities. Veterans who would be entitled to receive compensation for service-connected disabilities if they did not receive retirement pay. Veterans who are rated by VA as eligible to receive compensation as a result of pre-discharge disability examination and rating or on the basis of a pre-discharge review of existing medical evidence (including service medical and treatment records) that results in issuance of a memorandum rating. Veterans entitled to receive compensation, but who are not presently in receipt because they are on active duty. Surviving spouses of veterans who died in service or from service- connected disabilities (whether or not such surviving spouses are veterans with their own entitlement and whether or not they are using their own 28

29 Example of a COE showing the Veteran is exempt from the VA funding fee 29

30 How to Calculate the Funding Fee For all loans except IRRRLs, apply the appropriate percentage (from the funding fee table) to the loan amount. If the funding fee is to be paid from the loan proceeds, apply the percentage to the loan amount without the funding fee amount added to it. For IRRRLs, calculate the funding fee by completing VA Form IRRRL Worksheet 30

31 How to Use the Funding Fee Tables The lender must find the appropriate percentage in the tables using the following parameters: Is the veteran eligible for VA loan benefits through service in the regular military or the Reserves/National Guard? Examine the COE. For Reserves/National Guard, the COD bears the notation, RESERVES/NATIONAL GUARD INCREASED FUNDING FEE, and is buff-colored rather than green. Is the veteran a subsequent user of VA home loan benefits or obtaining his or her first VA loan? Examine the COE. An entitlement code of 5 indicates subsequent use, and does a loan number entered in the Loan Number column. What type of loan is the veteran obtaining? The funding fee varies depending upon whether the loan is a purchase, an IRRRL, or a cash-out refinancing loan. Is the veteran making a downpayment of at least 5 or 10%? Calculate what % of the sales price of the property the veteran is remitting as downpayment The downpayment can come from the veteran s own resources or a gift from an immediate family member. Except, if the purchase price exceeds the reasonable value of the property, the difference between the purchase price and the reasonable value must be paid by the veteran in cash from their own funds. No gift funds permitted. 31

32 Credit 32

33 CAIVRS CAIVRS must be pulled (via FHA Connection) on all borrowers. Note: Agency Type must be selected as Veterans Affairs AFR Lender ID: Defaulted CAIVRS are not permitted 33

34 Bankruptcy & Foreclosure Chapter 7 Must be discharged 2 years from date of application Borrower must have reestablished credit Chapter 13 Satisfactory performance for at least 1 year of pay out period and permission from the court to enter into the mortgage transaction Borrower must have reestablished credit Foreclosure The discharge date or the date the deficiency balance was paid must be 2 years prior to the application date For wet (escrow) states the date is based on the acknowledgement date of the document For dry states the date is based on the recorded date Note: If the foreclosure was on a VA loan, the Veteran may not have full entitlement available for the new loan. The VA Underwriter must ensure that the applicant's Certificate of Eligibility reflects sufficient entitlement. 34

35 Credit Overview Alimony Borrower must provide a copy of the filed divorce decree or filed separation agreement to document the amount of the liability; Document that the borrower has been satisfactorily been making payments As an alternative qualifying method, the monthly alimony can be deducted from the borrower s gross income in lieu of being included as a debt. Child Support The debt must be counted as a recurring obligation and may not be deducted from income; Obtain a copy of document mandating child support and verify that the borrower has satisfactorily been making payments. Collection Accounts Per VA Lender Handbook Section 4.7c: Isolated collection accounts do not necessarily have to be paid off as a condition for the loan approval. For example, a credit report may show numerous satisfactory accounts and one or two unpaid medical (or other) collections. In such instances, while it would be preferable to have collections paid, it would not necessarily be a requirement for loan approval. However, collection accounts must be considered as part of the borrower s overall credit history and unpaid collection accounts should be considered open, recent credit. Borrowers with a history collection accounts should have reestablished satisfactory credit in order to be considered a satisfactory credit risk. Note: The AFR Underwriter has sole discretion to decide whether or not this guideline has been met. 35

36 Credit Overview Consumer Credit Counseling Services (CCCS) Consumer Credit Counseling is permitted under VA guidelines where the following has been met: Borrowers must demonstrate a satisfactory 12 months history (0x30) CCCS Administrator must sign a letter allowing the borrower to seek financing Contingent Liabilities AFR Underwriter has sole discretion not to consider this debt if the borrower can provide evidence that the primary obligor has been making payments on a regular basis (12 months history) and does not have a history of delinquent payments on the loan over the past 12 months. Judgments Must be paid in full, or A satisfactory repayment play is in effect at time of application and there have been no late payments on the plan for 12 months 36

37 Community Property States VA recognizes community property states: (AK, AZ, CA, ID, LA, NV, NM, TX, WA, WI) The Non-Purchasing Spouse in a community property state does not appear on the Mortgage, Note or Deed unless State law requires non-purchasing spouse to either sign security instruments or present documentation evidencing that he/she is relinquishing all rights to the property Credit report must be ordered for non purchasing spouse. The borrower must qualify with the nonpurchase spouse s liabilities. The credit history and/or derogatory credit of the NPS is not considered in the borrower s creditworthiness review The non- purchasing spouse is not required to meet credit score requirements Note: If the borrower is legally separated, they will still be considered married and the non-purchasing spouse must provide a full credit report to be considered as the creditworthiness review of the file. 37

38 Housing History Purchase: A management VOR or cancelled checks is required regardless of the FICO and the AUS findings Exception if the Veteran is recently discharged and was living on a military base, VA will not require a housing history, but the file still must meet VA guidelines Rate and Term Refinance: 12 month housing history is required (0x30) Cash Out Refinance: 12 month housing history is required (0x30) IRRRL: 12 month housing history is required (0x30)An exception May be considered if the loan is no more than 1x30 in the first 6 months of The 12 month history 38

39 Maintenance & Utility Factors (All States) Veterans must qualify with the monthly maintenance and utility factors into the housing expense and residual income guidelines: $0.14 times the Gross Living Area (GLA) Example: 1500 square feet X.14 per square foot per month= $ per month 39

40 Recurring Obligations (Debts) All monthly debts must be included in the qualifying ratio and residual income. Revolving accounts will be calculated on the greatest of: 5% of the balance; $10; or the actual payment. Any installment debt with less than 10 months remaining, but with a payment likely to cause hardship to borrower (at the discretion of the underwriter) must be included. 40

41 Short Sale Short Sale and Principal Forgiveness No mortgage late payments allowed on any loan modification/ short sales within the past 12 months. Note: If the short sale is on a VA-guaranteed loan, the mortgage is considered compromised. The Underwriter must confirm that the Veteran has sufficient entitlement as reflected on the certificate of eligibility (COE). Reminder: If the veteran does not have sufficient entitlement, the loan amount will need to be recalculated. Principal Forgiveness/Short Pay Off VA Loan Not permitted: If any mortgage on the property being refinanced is a VA-guaranteed loan, AFR will not permit a principal forgiveness/ short pay off. Non-VA Loan Permitted: If any mortgage on the property being refinanced is non VA-guaranteed loan (FHA, Fannie Mae, Freddie Mac, etc.), AFR will permit a principal forgiveness/ short pay off provided the following conditions are met: Mortgage must have no mortgage lates within the last 12 months; Mortgage must not report on credit with any derogatory annotations, such as comprised, modified, in dispute, foreclosure, etc. Mortgage pay off statement must reflect the amount of the principal forgiveness/short pay off. 41

42 Ratios 31/41% AFR will allow a 40/49.99% with DU Approve/Eligible and Veteran must have 1.5x the required residual income* *See Residual Income Requirements 42

43 Compensating Factors Excellent credit history Conservative use of consumer credit Minimal consumer debt Long-term employment Significant liquid assets Sizable down payment The existence of equity in refinancing loans Little or no increase in shelter expense High residual income Low Debt-to-Income ratio Tax credits for child care Tax benefits of home ownership 43

44 Compensating Factors can not be used to offset unsatisfactory and adverse credit. 44

45 Income 45

46 Employment history requirements for all borrowers: Income Examples The loan application must show a complete 2 year employment history. Note: Any gaps over 30 days must be addressed by the borrower with a detailed signed and dated letter of explanation. Note: All employment must be verified with CPA letter (self-employed borrowers), verbal verification of employment or a thoroughly completed verification of employment. Alimony/ Child Support Borrower must provide a copy of the filed divorce decree for filed separation agreement. Document that the payments have been received during the last 12 months and will continue for the next 3 years from the date of closing. Non-Taxable Income Reference current tax withholding tables with the IRS to determine an amount that can be prudently employed to adjust the borrower s actual income when grossing up. Tax free income can be grossed up for DTI purposes but not for residual income qualification. 46

47 Additional Sources Of Income Bonus/ Overtime Income Borrower must be receiving for prior two years and year to date (ytd). Employer must confirm that the overtime is likely to continue on the written verification of employment (VOE). The use of overtime will not be used to qualify if the overtime has declined. Commissioned Income Must be averaged during the past 2 years and year to date. Subtract any unreimbursed expenses from the gross. If received less than 2 years, it can be considered as effective income if the underwriter can provide rationale and can document that it will continue. Less than 1 year receipt of commissioned income is generally not permitted. Two years tax returns with a signed 4506-T is required. Self-Employed Borrowers 25% of greater ownership interest in a business. Must be self-employed for 2 years. 47

48 Additional Sources of Income Active Military Income and Recent Discharge or Voluntary Separation An original or certified copy of the applicant s Leave and Earnings Statement (LES) is required. The LES must furnish the same information as a verification of employment (VOE). The LES must be no more than 120 days old For loan closed automatically, the date of the LES must be within 120 days of the date the note is signed. Note: The Department of Defense provides service members access to a computer generated LES through mypay (formerly known as E/MSS- Employee Member Self Service). This type of LES is acceptable. In addition, identify service members who are within 12 months of release from active duty or end of contract term. Find the date of expiration of the applicant s current contract for active service on the LES (for an enlisted service member). For a National Guard or Reserve member, find the expiration date of the applicant s current contract. Service members who are within 12 months of release from active duty or at the end of their contract terms require additional information. Note: The ETS (expiration of term of service) or EAOS (Expiration of Active Obligated Service) date can be found on the LES for enlisted personnel or on an officer s orders. If release will be within 12 months of the anticipated closing date, one of the following is required: Evidence that the applicant has already re-enlisted or extended his or her period of active duty to a date 12 months beyond the date of closing, or Verification from a valid offer of local civilian employment, or A statement from the service member that he/she intends to reenlist or extend his or her active duty date beyond the 12 month period PLUS A statement from the applicant s commanding officer confirming that the applicant is eligible to reenlist or extend his or her active duty and has no reason to believe that such reenlistment or extension of active duty will not be granted. Note: Continuation of military allowances (flight pay, hazardous duty pay, etc.) must be determined to count as income. If continuation can not be determined, these allowances may be used to offset Intended short term for debts internal (24 months AFR use or less) only. This is 48