The changes will be effective with new applications on or after February 15, 2019.
In advance of the upcoming changes to VA cash-out refinances announced via VA Circular 26-18-13, included below is a brief summary of some of the changes for awareness. A more detailed announcement will be issued closer to the February 15th effective date.
Key highlights of the changes to cash-out refinances include:
- New definitions of Cash-Out Refinances
- TYPE I Cash-Out Refinance - Loan amount (including VA funding fee) does not exceed the payoff amount of the loan being refinanced. Closing costs are not rolled in.
- TYPE II Cash-Out Refinance - Loan amount (including VA funding fee) exceeds the payoff amount of the loan being refinanced.
- New LTV calculation: 100% maximum LTV including the funding fee, if applicable.
- Updated Net Tangible Benefit Test (NTB) required for all cash-out transactions
- New disclosure, signed by the veteran, is required within three (3) days of the loan application, and again at closing.
- Will require capturing certain data not captured today
NewRez will be ready to support the changes as of February 15, 2019, with system updates, new disclosures, an updated NTB Worksheet, and an updated product profile.