The Future of VA Loan Origination

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1 The Future of VA Loan Origination May 16, 2013

2 Welcome! questions to Overview: VA pipeline for 2013 Recent changes from VA Possible enhancements VA may be making in the near future. About VA Loans: 55% of Veterans have used their VA home loan Benefit No down payment No MIP Servicing programs available Veterans in Receipts of service-connected disability benefits are exempt from the funding fee Lenders can have 25% of the Freddie Mac conforming loan limit guaranteed by the US government 2

3 Our Panelists Brian Montgomery Chairman of The Collingwood Group, which he co-founded in 2009 Served as Assistant Secretary of the U.S. Department of Housing and Urban Development (HUD) and FHA Commissioner. Montgomery came to HUD and FHA from the Executive Office of the President of the United States. Brideen Gallagher Managing Director of Collingwood s Risk Management and Compliance Division. Areas of expertise include risk analysis, lender compliance and FHA lender approval. Carol Barnard Senior Consultant with The Collingwood Group. Loan Production Officer in VA Denver Regional Loan Center She has over 23 years of experience underwriting and auditing VA loans as well as leading on-site training for VA lenders. 3

4 Recent Trends is VA lending The VA home loan program appears to be more popular among lenders and more veterans are taking advantage of the program 2013 so far: 200,000+ VA loans $50 Billion in production Refinances present a valuable business opportunity for lenders Refinances make up 67% of the VA loans Lenders don t realize refinancing into the VA program is an option 4

5 Recent Regulatory Changes User Role Designation: That person will be responsible for validating employees once a quarter. Users must be validated every 90 days. Users not validated will be deactivated and denied access to VA systems The lender designated Administrative User will be alerted via at the 75 day mark VA Circular dated March 12, 2013, has more information on this issue. ( Development of Lender Scorecard: Purpose: Track the differences in the veteran experience in applying for a VA Home Loan, Protect veterans rights by analyzing each home loan Determining training opportunities through an automated environment. Scorecard will focus on the Veteran s experience with the lender VA will be seeking input from lenders VA could have a scorecard up and running in 2014 New Rule Proposal Will be out for comment in the very near future. VA does not feel their underwriting guidelines should be superseded by those that CFPB develops. VA feels that due to the performance of the VA Home Loan there is not a need for any significant changes to the underwriting guidelines. 5

6 Upcoming Changes Major contract was awarded to Core Logic for AMS/AVM system All appraisals will be scored. The appraisals will be evaluated in an automated rule system that will flag issues which will be reviewed by SAR s (VA Staff Appraisal Reviewers). Perform targeted reviews and determine areas of opportunity for training. Electronic File Upload System: Files will need to be uploaded to a VA website instead of mailing in paper copies. Creation of Lender Liaison Position: Conduct consistency between RLCs and lenders. Lenders will now be receiving only one notification from VA for all RLCs and all loans. A work basket scenario would allow lenders to enter their loan packages selected for a full audit or review by a VA Regional Loan Center to a single site. Deficiency letters will also be consolidated and lenders will now be able to self-validate deficiencies. Funding Fee Payment System (FFPS). Limited impact on lenders 6

7 Allowable Fees and Closing Costs Allowable fees may be changed to specified charges and up to one percent origination fee. VA is discussing the possibility of raising residual income limit by 15 % Regulations should be out for publication in the very near and lenders and others will have an opportunity to comment. May take months until changes become law. VA may be Clamping down on unallowable fees being charged to veterans. Review the HUD-1 settlement statement prior to closing Common unallowable fees: Document Preparation fees Settlement or closing fees Tax service fees 7

8 Enforcement and Risk Management Enforcement: VA does on-site audits every year If a non-supervised lender has automatic authority, a Regional Loan Center may withdraw this authority for 60 days for violations. Risk Management: Do it right the first time! Check HUD-1 statements Consult checklists published by VA Register Agents, Underwriters, and SARs Ensure staff is properly trained 8

9 Collingwood Consulting Services VA Loan Origination Compliance Reviews: Mock Audits Policies and Procedure Review Quality Control Review Training VA Loan Servicing and Claims Compliance Reviews: Mock Audits Operational Readiness Review Training. 9

10 Contact Us Call Brideen Gallagher directly at (202)