VA Circular 26-19-22 announce clarifications and updates to policy guidance for IRRRLs. and rescinds previous Circulars, effective immediately.
Interest rate reduction refinance loans (irrrls) update
For an IRRRL that results in a lower monthly principal and interest (PI) payment, the recoupment period must not exceed 36 months from the date of the loan closing. This caluculation now excludes the funding fee (previously included), as well as escrows and pre-paid items. This calculation will be performed by the Net Tangible Benefit Worksheet. Please reference Circular 26-19-22 for full details of the calculation.
For an IRRRL that results in the same of higher monthly PI payment, the Veteran may incur no fees, closing costs, or expenses, other than the funding fee, escrows and pre-paid items.
Please note that the underwriting requirements for a payment increasing 20% or more still applies.
Loan Comparison Disclosure:
The fee recoupment calculation for the loan comparison will differ from the fee recoupment calculation described above. The calculation for the disclosure includes the funding fee, escrows and pre-paid items. While the Net Tangible Benefit Worksheet must reflect 36 months or less, the disclosure may reflect more than 36 months due only to the inclusion of the funding fee, escrows and pre-paid items, which are required per the disclosure form. Please reference Circular 26-19-22 for full details of the calculation.
Veteran Certification. The Veteran must communicate to the lender that he/she received the comparison statements, e.g. via written letter, e-signature, email from the Veteran certifying receipt system time/date stamp where the Veteran certified receipt, etc.
The final loan comparison disclosure will include the required Veteran's Certification of receipt which confirms they have received the initial disclosure within three (3) days of application, and again at closing.
discounts points paid:
NewRez is updating our policy to reflect that for any transaction when discount points are paid on the loan, an appraisal is only required when the loan is a Fixed Rate to Adjustable Rate IRRRL.
VA also clarified that the appraisal may be an exterior or full appraisal and does not have to be performed by a VA staff appraiser.
Please reference Circular 26-19-22 and the updated product profile and Net Tangible Benefit Worksheet for full details.
va lender's handbook chapter 13 update
Effective immediately, Chapter 13, Notices of Value, has been updated.
Key changes include:
- Topic 4 describes that use of electronic scoring of appraisal reports.
- Topic 8 explains that lender requirements which exceed VA requirements must not be placed on the NOV.
- Appendix A is an updated NOV. Infrequently used conditions were removed during this update.
Please reference Chapter 13 - Notices of Value (NEW) for full details.