Maximum LTV/CLTV and Credit Score Requirements VA IRRRL No Appraisal 1 Program Code(s): VF30IRRRLNA = 30 year VF15IRRRLNA= 15 year Occupancy LTV/CLTV 3 Min Credit Score 5 NYLX Codes O/O 1 Unit 100% 580-599 AFN O/O 1 Unit 115% 600-619 I-17, I-21, AFN O/O 1 Unit 125% 620-659 I-12 2, I-17, I-21 6, AFN O/O 1 Unit 150% 660+ I-12 4, I-17, I-21 6, AFN 1 Must have CoreLogic GEO AVM in file with FSD of 15 or less (required) on VA IRRRL No Appraisal program 2. Requires 640 Credit Score 3 Loan amount with VA Funding fee is included in LTV calculations 4 Max LTV 130% FICO 640 5 High Balance requires a 620 Credit Score- See High Balance section for max loan amounts per investor. 6 Max 115% if 600-680 fico if over 680 fico no max LTV,CLTV. ProgGuide_VAIRRRLNoAppr Rev. 07/29/2014 Page 1 of 7
Appraisal AUS Borrower Eligibility Condominiums Credit Document Expiration Dates VA IRRRL (With Appraisal) See VA IRRRL with Appraisal VA IRRRL (No Appraisal) A GEO AVM report obtained from CoreLogic is required AVM must support a value estimate sufficient to meet the LTV/CLTV limits for the program FSD Score must be 15; a loan with an FSD Score > 15 is not eligible AVM may not be older than 60 days from the closing (Note) date A full Conventional Appraisal may be provided in lieu of the AVM Manual underwrite required; AUS not permitted in the file Must be a Veteran with eligibility documented with a Certificate of Eligibility (COE), which also indicates the Veteran's Entitlement Resident Alien permitted as long as primary borrower is a Veteran Joint loans with co-borrower other than a spouse requires prior VA approval (a Veteran borrower plus spouse co-borrower is not considered a joint loan); I-6 does not allow joint loans IRRRLs do not require a condo approval VA does not require credit to be evaluated on VA IRRRLs; however, AFN will review and analyze the borrower s credit pattern on all rate reduction refinances to determine if the borrower has the ability to meet their obligations. Tri-merge credit report required. All borrowers must return at least 1 credit score via tri-merge credit report. Non-traditional credit is not allowed 0 X 30 X 12 on all mortgages. If the loan being paid off is less than 12 months old, the existing mortgage must be 0 X 30 since inception and the payment history of previous mortgages must also be 0 X 30 for 12 month period 3 years elapsed since completion of Foreclosure, Deed-in-Lieu/Short Sale when the borrower WAS delinquent at the time of transfer A borrower with a recent Chapter 13 Bankruptcy may need approval of the trustee for a new loan. Full Appraisal/2055 = 90 days Corelogic AVM = 60 days (to note date) All other Credit Docs = 90 days ProgGuide_VAIRRRLNoAppr Rev. 07/29/2014 Page 2 of 7
Entitlement Escrow Holdbacks Escrows/Impounds Exclusionary List Funding Fee Entitlement is the amount of VA Guaranty available to a Veteran for use on a loan; the amount of entitlement will be displayed near the center of the COE Veterans with partial entitlement are allowed provided both of the following conditions are met o The VA Guaranty covers at least 25% of the total loan amount, and o There is no evidence VA has suffered a loss from the Veteran (such as a compromised entitlement on the COE or prior VA Loan foreclosure, deed-in-lieu or short sale) The COE will never reflect any additional specific entitlement amount over $36,000 for loans greater than $144,000, but will reflect "Available" The veteran must have sufficient available entitlement for the loan. If an existing VA loan on the same property will be paid off by the refinancing loan, the entitlement used for that existing loan can be restored for purposes of obtaining the new loan. Not allowed An impound account for collection of taxes and insurance (or additional escrow items) is required All borrowers must be screened by CAIVRS to determine there have been no late payments on Federal debt obligations The HUD Limited Denial of Partnership (LDP) list and the General Services Administration (GSA) lists must be reviewed for all borrowers The VA Funding Fee may be financed in the loan amount The following Veterans are exempt from paying the funding fee: o Veterans receiving VA compensation for service connected disabilities o Veterans who would be entitled to receive compensation for service connected disabilities if they did not receive retirement pay o Veterans who are rated by VA as eligible to receive compensation as a result of pre-discharge disability exam and rating o Veterans entitled to receive compensation, but who are not presently in receipt of the compensation because they are on active duty o 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 entitlement on the loan ProgGuide_VAIRRRLNoAppr Rev. 07/29/2014 Page 3 of 7
Income/Employment High Balance Income not required unless credit qualifying IRRRL Provide an acceptable VVOE for all borrowers. Third party verification required for self employed borrowers. Requires 620 Credit Score 30 year term only VA Loan Limits by geographic region: http://www.benefits.va.gov/homeloans/loan_limits.asp Maximum loan amount cannot exceed lesser of VA County Loan Limit or Appraisal (if required). Existing VA loan balance, plus allowable fees and charges, plus up to two discount points, plus the cost of any energy efficiency improvements, plus the VA funding fee Investor Max Loan Limits o I-6 County loan limit or $700,000 Req 680 Score o I-7 Lesser of County loan limit or $1,500,000 Req 620 to $1m 700 fico >$1m o I-12 Lesser of County loan limit or $1,200,000 Req 600 IRRRL w/appraisal 640 VANA o I-15 Lesser of County loan limit or $750,000 Req 620 Score o I-17 County loan limit Req 620 Score Loan Purpose VA IRRRL - Disbursed cash out to the Borrower cannot exceed $500 Occupancy Property Types, Eligible Owner Occupied Condominiums PUDs Single Family Attached/Detached ProgGuide_VAIRRRLNoAppr Rev. 07/29/2014 Page 4 of 7
Property Types, Ineligible Ratios Seasoning State Restrictions Tax Transcripts Term In addition to the ineligible property types identified in VA Lender's Handbook, the following property types are ineligible: o Condotels o Cooperatives o Geodesic Domes o Hotel Condominiums o Manufactured homes o Mobile Homes o Timeshares o Unimproved Land and property currently in litigation Commercial Enterprises (e.g. Bed and Breakfast, Boarding House, Hotel) o Working Farms and Ranches VA IRRRLs: Ratios not calculated Credit Qualifying required if payment increase exceeds 20% Ratios cannot exceed 43%. Loan must be seasoned for 6 months before eligible for IRRRL. Loans on properties in Texas 50 (a)(6) (CASH OUT) are not allowed. Tax transcripts are not required on IRRRLs w/o credit qualifying. The 4506-T is required to be signed with closing docs. Fixed Rate only, 15 and 30 year terms; high balance only allowed on 30 year terms 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. For example, if the old loan was made with a 15-year term, the term of the new loan cannot exceed 25 years. ProgGuide_VAIRRRLNoAppr Rev. 07/29/2014 Page 5 of 7
Unpermitted Property Additions Underwriting AFN will purchase loans secured by properties with unpermitted structural additions under the following conditions: The subject addition complies with all investor guidelines; The quality of the work is described in the appraisal and deemed acceptable workmanlike quality ) by the appraiser; The addition does not result in a change in the number of units comprising the subject property (e.g. a 1 unit converted into a 2 unit); and If unpermitted addition given value, appraiser must be able to demonstrate market acceptance by the use of comparable sales with similar additions and state the following in the appraisal: o Non-Permitted additions are typical for the market area and a typical buyer would consider the "unpermitted" additional square footage to be part of the overall square footage of the property. o The appraiser has no reason to believe the addition would not pass inspection for a permit. VA Lender s Handbook (VA Pamphlet 26-7): http://www.benefits.va.gov/warms/pam26_7.asp Property may not be located in an area that has been impacted by a federally declared disaster within 90 days of closing. http://www.fema.gov/disasters Maximum cash back is $500 Ratios are not calculated Manual u/w on IRRRLs: ratios n/a on loans with payment increase less than 20% Credit Qualifying required if payment increase exceeds 20% Ratios cannot exceed 43%. Income documentation is not required VVOE or 3 rd party verification for self-employed borrowers is required at time of funding to confirm the borrower is employed The borrower must be the same (except removal of a non-veteran spouse due to death or divorce; provide supporting documentation indicating event occurred at least 12 months before the time of application); there will be no exceptions granted to this requirement. Only new spouses can be added The principal and interest payment on the IRRRL MUST be less than the loan being refinanced unless one of the following exceptions applies: o The IRRRL is refinancing an ARM o Term of the IRRRL is shorter than the term of the loan being refinanced ProgGuide_VAIRRRLNoAppr Rev. 07/29/2014 Page 6 of 7
UP TO $45,000 MAXIMUM GUARANTY (VA Guaranty must cover at least 25% of the total loan.)* LOAN AMOUNT $45,001 TO $56,250 $22,500 50% OF THE LOAN AMOUNT MAXIMUM POTENTIAL GUARANTY $56,251 TO $144,000 40% OF THE LOAN AMOUNT (MAX OF $36,000) $144,001 TO $417,000 25% OF THE LOAN AMOUNT GREATER THAN $417,000 THE LESSER OF 25% OF THE COUNTY LOAN LIMIT, OR 25% OF THE LOAN AMOUNT * Guaranty percentages and amounts are based on the loan amount including the funding fee when the fee is paid from loan proceeds. ProgGuide_VAIRRRLNoAppr Rev. 07/29/2014 Page 7 of 7