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VA IRRRL Guideline Update

(Applicable to Correspondent Channel)


Dear Licensed Partner,

Sun West has updated its product guidelines for VA IRRRL transactions based on the requirements in the VA Circular 26-18-13.

Effective immediately all loans with the application date on or after 05/25/2018, the following requirements must be met:

  • The maximum recoupment period is limited to 36 months. The months to recoup and the closing cost must be calculated in accordance with VA Circular 26-18-1*.

  • The Correspondent must provide the veteran with a statement (Click here for sample form) acknowledging the effect of the refinancing loan on the veteran’s loan payments and the interest rate within three (3) business days from the loan application date.

  • The statement must have the following:
    • The interest rate and monthly payments for the new loan versus the old loans
    • Time taken to recoup ALL closing costs including those paid outside of closing
  • In case of FRM to FRM or FRM to ARM transaction, the following net tangible benefit must be met:
  • From
    TO
    FRM ARM
    FRM
    At least 0.5 percentage points (i.e. 50 basis points) below the prior interest rate. At least 2.0 percentage points (i.e. 200 basis points) below the prior interest rate.
  • In case of an ARM to ARM transaction, there must be at least 0.5 percentage points (i.e. 50 basis points) below prior interest rate.
  • Loan must meet following seasoning requirements:
    • The note date of the refinance loan must be on or after the later of:
      • a) the date that is 210 days after the date on which the first monthly payment was made on the mortgage being refinanced, and
      • b) the date on which six (6) full monthly payments have been made on the mortgage being refinanced.
  • If the discount point is charged on the loan, the following maximum LTV requirement must be met:
  • DISCOUNT POINTS MAXIMUM LTV (Loan-to-Value)
    Less than or Equal to 1.0% 100%
    More than 1.0% 90%
    • The appraisal fee must be disclosed on the Loan Estimate (LE).
    • In order to determine the LTV, an appraisal report is required. Acceptable appraisal reports are Exterior-only Appraisal report (Fannie Mae Form 2055 or 1075 for condominiums), Uniform Residential Appraisal Report (Fannie Mae form 1004 or 1073 for condominiums) and form 1004C for manufactured homes.

For additional questions not answered by this Lender Alert, please email Sun West's underwriting scenario desk at uwscenarios@swmc.com for more information.

If you have any questions, please call our Underwriting Hotline at (800) 241-7113.


Sincerely,

Sun West Mortgage Company, Inc.

6131 Orangethorpe Avenue, Suite 500
Buena Park, CA 90620
Phone: (800) 453-7884



SW-1: Our No Overlays Program
*Closing cost for months to recoup calculation must include fees disclosed in Loan Estimate (LE) Sections (sum of LE sections A, B, C, E, H, and VA funding fee (if not included in section B) and deduct any lender credit listed in section J of Loan Estimate.

This information is provided to licensed brokers/lenders only and may not be copied or distributed to customers or potential customers. All loans are subject to approval. Certain restrictions may apply. Listed pricing is a morning indication only. Program rates, prices, guidelines, fees, costs, terms and conditions are subject to change without notice.

Equal Housing Opportunity