VA announced that a Certificate of Eligibility will be required on IRRRLs.
Effective immediately, VA has released Circular 26-19-17, Funding Fee Guidance for Lenders and Servicers. This addresses determining whether the veteran is exempt from the funding fee, and actions to take to ensure the Certificate of Eligibility is accurate at the time of closing.
A key change is that a Certificate of Eligibility (COE) is now required on all loans, including IRRRLs.
For all loans, if the COE does not show that the Veteran is exempt from paying the funding fee, the Veteran must be asked if he or she has a claim for compensation pending with VA. If so, an updated COE must be obtained no earlier than 3 days before the loan closing using the COE "Correct" function in WebLGY.
Funding Fee Correction Request. Lenders and servicers must initiate a request in the Funding Fee Payment System (FFPS) within 3 business days from being notified by VA or the Veteran of an overpayment of the funding fee to include a request for a retroactive refund.
This supplements the Department of Veteran Affairs (VA) Lenders Handbook, Chapter 8, Topic 8, The VA Funding Fee, and updates Chapter 6, Refinancing, concerning Interest Rate Reduction Refinancing Loans (IRRRLs).
Please reference the Product Profiles page for full details of the changes outlined in this announcement.