A Few Changes for VA Loan Types

Written By: Bonnie Wilt-Hild

These days it seems as though the rules never stop changes where the preeminent mortgage programs are concerned, those of course being Conventional, FHA and VA, but it’s always nice when the change is something for the better and today I have the pleasure of delivering the good news. Recent VA circular’s issued on September 8, 2011, more specifically Circular 26-11-12 are indicating a reduction in the VA funding fee for loans closed on or after October 1, 2011.

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More specifically, for loans closed on or after October 1, 2011, the VAFF for subsequent use loans with down payments of less than 5% and subsequent use regular refinance loans will now carry a 2.8% VAFF, this down from the 3.30% currently charged. This equates to a .50% reduction in total. Additionally there are funding fee changes for loans other then subsequent use loans which are also being reduced. The new funding fees for first time use for Veterans is being reduced to 1.40% and for Reservist/National Guard veteran types to 1.65% for cases with LTV’s greater than 95% and even further still for cases involving down payments of 5% or more. A veteran now putting 10% down on a purchase transaction never having used their entitlement in the past will now only pay a .50% VAFF.

Now of course, not all news can be good news so I thought I would also convey some changes in VA policy regarding natural disasters since, I myself, have experienced plenty of them in the past several weeks. VA has now implemented policy regarding loans for mortgagors who’s properties are located in federally declared disaster areas, more specifically “any loan closed prior to the date of the declared disaster is eligible for VA Guaranty without regard to the disaster”, however for a loan on a property appraised on or before the date of the declared disaster and not closed prior to that date will require re-inspection and the both a Lender and Veteran Certification indicating that the property has been inspected to ensure that it was not damaged as a result of the recent disaster. The verbiage for these certifications can be found on VA’s website and are also required on IRRRL transaction types. Also, this guidance was provided with further guidance on employment and income whereas VA is now requiring that the lender re-verify employment prior to loan closing to ensure that the veteran is still employed and his/her income has not changed since the time of the original verification of employment.

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In closing I would like to say that for those of you lenders out there that are not yet approved to complete VA loan transactions, it is defiantly something to think about. Not many other loan types will allow 100% LTV’s on both purchase and rate/term transactions and for those veterans, active duty service men and women as well as reservist, the underwriting
guidelines’ provide flexibility not found with the other programs and of course, they are fun to underwrite. Information as to how to become a VA approved lender is located on their website at https://vip.vba.va.gov/portal/VBAH/Home?paf_portalId=default&paf_dm=shared#. As always, happy underwriting!

About The Author
Bonnie Wilt-Hild
- As an NAMP® staff writer, Bonnie currently serves as a senior instructor for FHA Online University (www.FHA-Classes.org) as well maintains a full-time mortgage underwriting position as the Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans". If you're interested in becoming a writer for NAMP®, please email us at: contact@mortgageprocessor.org.


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