It s easier than you think! Phoenix Regional Loan Center

Transcription

1 It s easier than you think! Phoenix Regional Loan Center

2 Why VA Loans? Help veterans Fast and easy to process Flexible underwriting standards Potential Income--- Over 18.6 Billion Loans Totaling $1,027,282,752,622!

3 Agenda Types of loans Veterans Information Portal Eligibility Occupancy Loan Processing Credit and Income Allowable Fees & Charges

4 Types of Loans Prior Loans Purchase or Construction Refinance (Cash Out or IRRRL) Energy Efficient Mortgages Many More Lenders Handbook, Chapter 3, sec. 2

5 Prior Approval the Lender Originates Processes Submits to VA for underwriting approval Closes the loan after commitment from VA is issued

6 Prior Approval Loans Joint loans (vet/non-vet; two or more vets) Non-serviced connected VA pension Rated incompetent by VA Delinquent IRRRLs Others

7 Energy Efficient Mortgages (EEMs) Home improvements to reduce utility costs Add up to $6,000 to loan amount Section 7.03 of the Lenders Handbook

8 Adjustable Rate Mortgages Extended through % annual adjustments Rate increase capped at 5% MUST be underwritten at 1% above note rate

9 Hybrid ARMs Extended through 2012 Fixed a minimum of 3 years Underwritten at initial note rate Adjustments and interest rate cap are dependent on length of fixed term. VA Circulars &

10 Cash Out Refinance Maximum loan amount for Cash-Out Refinances can now be up to 100% of the reasonable value plus VA Funding Fee & Energy Efficient Improvements

11 Maximum Possible Loan Amount Is the lesser of Appraised Value or Purchase Price plus VA Funding Fee & Energy Efficient Improvements

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13 Veterans Information Portal vip.vba.va.gov Help Desk Logins are user specific linked to SSN Contact VA re: change of employment Keep your info up to date! News and Announcements posted on home page

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15 Portal Applications The Appraisal System (TAS) E-appraisal weblgy: - Automated Certificates of Eligibility (ACE) - Entering Prior Approvals - Guarantees - Prior Loan Validation (IRRRLs)

16 Eligibility Who is eligible? Active Duty Service Members Reserve/guard Members Unmarried Surviving Spouse Others Chapter 2, Sections 4 & 5 Veterans

17 Time Required 90 days wartime 181 days peacetime *Minimum 2 yr requirement for those enlisted after Sept. 7, 1980 Reserve/Guard 6 years total service **unless activated under USC Title 10

18 How to obtain COE WebLGY Eligibility Automated Certificate of Eligibility (ACE) Send application & proof of service to Winston Salem Eligibility Center For IRRRLs use Prior Loan Validation Refer to Chapter 2, sections 2 & 3

19 For an ACE transaction, enter data, then submit. You may get your certificate, or you may be unsuccessful

20 Link to the existing record An unsuccessful ACE attempt Link to Electronic Application

21 Add a New Application at any time This existing record shows the status is pending If needed, you can upload documents (DD-214, Paid-in-full, etc.)

22 You can search for an existing record by Reference Number, SSN, Service Number, or Name

23 For IRRRLs Use Prior Loan Validation in lieu of COE WebLGY Eligibility Prior Loan Validation LIN Search 1 st five letters of vet s last name SSN

24 Loan Identification Number is also called the VA Case Number Use for IRRRLS instead of COE

25 Sample Prior Loan Validation

26 Just the Facts Automated COE = Electronic Application System cannot automatically restore entitlement. Upload docs with a pending application. Use current legal name on application, previous name in Alternate Name blocks.

27 Using the Mail VA Form Proof of Service Documentation Any restoration documents Winston-Salem Eligibility Center P.O. Box Winston Salem, NC 27120

28 UNRESTORED ENTITLEMENT WILL LIMIT THE GUARANTY! Check your COE! If basic entitlement is less than $36,000 you may need a restoration! Regular Restoration One-Time Restoration Cash-out Refinance Restoration

29 Maximum Guaranty varies with property location. List on Website If the veteran has previously used entitlement and Maximum Guaranty/ County Loan Limits the new loan is less than $144,000---max guaranty is $36,000 minus the previously used entitlement; the new loan is more than $144,000 but less than $417,000---max guaranty is $104,250 minus the previously used entitlement; the new loan is more than $417,000---max guaranty is 25% of county limit minus the previously used entitlement.

30 Underwriting Objective Four basic tenets of a VA loan Use reasonable judgment and flexibility Occupancy Income Eligibility Credit

31 Occupancy Veteran must occupy within 60 days Exception: - IRRRLs - Active duty service person s spouse - Active duty on temporary status - Specific future event Chapter 3, Section 5

32 Processing the loan Obtain COE Request Appraisal (Order LIN) Initiate CAIVRS Determine if VAFF exempt Determine Occupancy requirement is met Credit Report & Verifications VA Specific Certifications

33 VA Certifications Addendum to URLA VA Form A Interest Rate and Discount Disclosure Statement Lender Quality Certification Counseling Checklist VA Form (active duty only) Report & Certification of Loan Disbursement VA Form For IRRRLs: 30 day Prior Loan Cert Comparison Statement w/ # of months to Recoup Cost of Loan IRRRL Worksheet (VA Form ) Federal Collection Policy Notice Cash Out Refi Statement POA / Alive and Well Late Reporting

34 Verification of Benefits VA Form Ask the veteran 1. Do you receive benefits? 2. Are you entitled to receive them? 3. Have you received them in the past? 4. Are you an unmarried surviving spouse? If yes, to any of these questions, submit the form to the appropriate VA Regional Loan Center

35 Verification of Benefits VA Form Submission procedures for the Phoenix RLC: Fax (602) E-Fax (215) Turnaround time is 24 to 48 hours.

36 Contractual Issues Escape Clause (a.k.a. VA Option Clause) Cash assets may be used for difference Value less than purchase price Refund of Earnest Money if VA Financing cannot be obtained New Construction: option item deposits may not be refundable Pest Inspection

37 Income Stable and reliable Anticipated to continue Sufficient in amount Reportable/verifiable

38 2 Year History Required! Consider Type Training/Education/Qualifications Past History Likely to continue EXPLAIN GAPS!

39 Income Verification VOE VA Form Employment Verification Services (TALX or VIE) Alternative Documentation - Verbal Verification - Pay stubs for most recent 30 days - W-2 s for previous 2 years Less than 120 days (180 days for new construction)

40 Other Types Self Employed - Income Tax Returns - YTD Profit and Loss - Balance Sheet Commissions - Frequency & basis - YTD payments

41 Part Time/Overtime Verified for at least 2 year history Regular and predictable Likely to continue Less than 2 years but at least 12 months, use to offset debts

42 Rental Income Multi Unit (Securing Loan) Vet must occupy one of the units 6 months reserves PITI Property management & rental experience May use 75% as effective income Other Property (Investment Property/Not Securing VA Loan) 3 months reserves PITI 2 years tax returns documenting rental income Must be verified as stable and reliable

43 Rental of property previously occupied by borrower May NOT be used as a source of income Offset existing mortgage payment Need signed lease agreement

44 Active Duty Check ETS date BAH/BAS non-taxable Allotments/ debt repay

45 Income less than 12 months Generally not stable and reliable Carefully consider - Special training/education & skill required - Employers probability of continued employment Explain why you are using!!!

46 Credit History 3-File Merged (MCR) Residential Mortgage Credit Report (RMCR) Spouse s history in community property state Rent/Mortgage history

47 What we weigh Overall picture/pattern Greatest weight on most recent 12 months Collection Accounts Charge Offs Federal Debt Absence of credit history/ Non-traditional

48 Chapter 7 Bankruptcy Consider Reasons, develop facts Re-established credit Discharged over 24 months disregard Discharged over 12 months beyond control of borrower Chapter 4, sec. 7 of Lender s Handbook

49 Chapter 13 Bankruptcy & Consumer Credit Counseling Borrower effort to pay Acceptable with 12 month payment history Approval of trustee or agency

50 Foreclosures Develop facts/circumstances Treat same as Chapter 7 VA Loan: - Ensure no debt to government - Entitlement Restored

51 Debts and Obligations Childcare Alimony/child support Explain allotments on LES/pay stubs Any debts with significant payment

52 You may disregard Student loans deferred 12+ months 401K loans (may not include with assets) Co-obligor on another s loan - evidence payments made by someone else - no reason to believe the borrower will need to make payments in the future Insignificant debts with <10 months

53 Assets Sufficient in amount VOD form Alt docs: Last 2 bank statements Gift letters

54 Loan Analysis, VA Form Maintenance & Utilities = $.14/sq. foot Gross up to Calculate DTI ratio only! Back out grossed up amount in other deductions field to get actual residual. Use Remarks Section: List compensating factors Resolve discrepancies

55 Residual Income Guidelines (Loans over $80,000) Add $80 for each additional family member up to a family of 7. Family Size Ratio 45% or below Over 45% 1 $491 $589 2 $823 $988 3 $990 $ $1117 $ $1158 $1390

56 Automated Underwriting Systems Approved Systems Loan Prospector Desktop Underwriter Clues (Countrywide/BofA) and Zippy (Chase) Garbage In = Garbage Out Data Integrity Follow Feedback Certification Risk Calculator Reduced Documentation Requirements Refer does NOT mean denial

57 VA Underwriting Summary 2 basic questions: Can the applicant pay? Will the applicant pay? Use flexibility and sound judgment Case by case basis, not an exact science Basic VA tenets

58 Remember Income should be predictable Documents should support calculations used Gross up only when calculating the ratio Reconcile any discrepancies List compensating factors Complete and include all necessary forms and certifications

59 VA Funding Fee

60 Allowable Fees & Charges Appraisal Report & Compliance Inspections Credit Report Prepaid Taxes and Hazard Insurance Title Exam and Title Insurance Fees Flood Zone Determination Environmental Endorsements (3.0, 8.1,103.5) Recording Fees Special Mailing Fees (Refinance only) Reasonable Discount Points (*2 points on IRRRL)

61 Origination Fee (1%) 1% Origination Fee Covers: Application or Processing Fees Doc Prep Fees Loan Closing/Settlement Fees Notary Fees Interest Rate Lock-In Fees Tax Service Fees Not an all inclusive list! Refer to Lenders Handbook, Chapter 8, Sec. 1

62 Unallowable Fees & Charges Pest Inspection Attorney s Fees Brokerage/Commission Fees Prepayment Penalties HUD/FHA Inspection Fees for Builders Loan Origination in excess of 1%

63 Seller Concessions Limited to 4% of Reasonable Value Include: Payment of the buyer s VA Funding Fee Prepayment of buyer s property taxes and insurance Gifts (television, microwave, car, etc.) Payoff of debts and judgments Do Not Include: Payment of typical closing costs Payment of discount points appropriate to the market

64 For More Information VA Lenders Handbook Online training courses Satellite broadcast and video training subscription service VA Regional Loan Center