VA Home Loans Training Guide

VA Home Loans

Training Guide

Presented by:

Cleveland Regional Loan Center

Revised January 2005

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Introduction

The purpose of this training guide is to provide a basic overview of the VA

home loan program. It is designed to give the reader a general

understanding of the steps involved in the processing, underwriting and

closing of a VA loan.

It should be understood that the only true source for processing VA home

loans is VA Pamphlet 26-7, Lenders Handbook, Revised January 1, 2001.

Please also keep in mind that there have been 4 changes added to this

Handbook since January 2001, that must be incorporated into the Lenders

Handbook.

This training guide is not all inclusive and does not cover every topic

discussed in the Lenders Handbook.

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TABLE OF CONTENTS

Chapter 1, Loan Basics

Introduction ............................................................................................................... 1

Lender Participation ................................................................................................. 1

Entitlement................................................................................................................. 2

Loan Types and Amounts ........................................................................................ 2

Occupancy................................................................................................................. 6

Loan Approval Requirements .................................................................................. 7

Chapter 2, Eligibility

How to Obtain a Certificate of Eligibility................................................................. 8

Restoration of Previously Used Entitlement ........................................................ 13

VA Entitlement Codes............................................................................................. 14

Chapter 3, Getting Started

Initial Loan Processing Forms............................................................................... 15

Chapter 4, VA Appraisals/LAPP

The Appraisal System (TAS) ................................................................................. 16

Requesting the VA Appraisal................................................................................ 17

LAPP Lender Quality Control System.................................................................. 19

Specific Appraisal Review Requirements ........................................................... 21

Determining Reasonable Value ............................................................................ 22

Value Changes ....................................................................................................... 22

Chapter 5, Funding Fee

The VA Funding Fee ............................................................................................... 24

Who¡¯s Exempt From The Funding Fee.................................................................. 24

How To Verify A Veteran Is Exempt From The Funding Fee............................... 24

Funding Fee Table .................................................................................................. 25

Funding Fee Refunds ............................................................................................. 25

Chapter 6, Credit Underwriting

Income...................................................................................................................... 26

Assets ...................................................................................................................... 29

Debts & Obligations................................................................................................ 30

Credit History .......................................................................................................... 30

Automated Underwriting ........................................................................................ 31

VA Form 26-6393, Loan Analysis........................................................................... 32

Calculating Residual Income ................................................................................. 32

Debt-to-Income Ratio.............................................................................................. 33

Compensating Factors ........................................................................................... 33

Chapter 7, Loan Closing and Submission

Fees and Charges ................................................................................................... 35

Seller Concessions ................................................................................................. 36

Obtaining Guaranty................................................................................................. 36

Modified Guaranty Package ................................................................................... 37

Web Based Loan Summary Sheet (WBLS) ........................................................... 37

Full Origination Loan Package .............................................................................. 38

The VA Loan Number.............................................................................................. 41

The Lender Identification Number......................................................................... 42

Office of Jurisdiction Codes .................................................................................. 43

Chapter 8, Special Circumstances .............................................................................. 44

Active Duty Certification ........................................................................................ 44

Counseling Checklist for Active Duty Members .................................................. 45

Power of Attorney ................................................................................................... 46

Alive and Not Missing In Action Certification ...................................................... 46

Chapter 9, VA Updates

VA Training Initiatives ............................................................................................ 48

VA Hybrid Adjustable Rate Mortgages ................................................................. 49

Chapter 10, Loan Processing Steps

Loan Processing Steps .......................................................................................... 50

Chapter 11, Frequently Asked Questions................................................................... 53

Appendix A: Loan Processing Forms ........................................................................ 62

Appendix B: Acronyms ............................................................................................... 66

Appendix C: VA Regional Loan Centers.................................................................... 67

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Chapter 1:

Loan Basics

Introduction.

The Cleveland Regional Loan Center (RLC) is one of nine nationwide locations

handling Loan Production (LP) activities. The Cleveland RLC provides loan guaranty services for six

states: Delaware, Indiana, Michigan, New Jersey, Ohio and Pennsylvania. The purpose of this user

guide is to provide certain information that will facilitate the processing of home loans that are to be

guaranteed by VA. VA¡¯s complete instructions to lenders and others is found in the VA Lender¡¯s

Handbook, VA Pamphlet 26-7.

Other sources of VA information

available on the internet are:

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VA National website:

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VA National Loan Guaranty Information website: homeloans.

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The Cleveland, Ohio website:

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Information concerning Certificates of Eligibility: homeloans.eligibility.htm

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Direct access to VA Lender¡¯s Handbook: homeloans.handbook.htm

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Website to E-mail Various VA offices: homeloans.contact.htm

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To Download Various VA Forms: vba.pubs/forms1.htm

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VA Information Portal:



Lender Participation. Lenders must contact VA to obtain approval and a VA Lender

Identification number prior to accepting a veteran¡¯s loan application. VA Lenders are classified by the

following definitions:

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Supervised Lender - is subject to periodic examination and supervision by a federal, state or

territorial agency. A supervised lender can close VA loans without prior approval underwriting by

VA.

Non-supervised Lender - any lender that is not a supervised lender. A non-supervised lender

cannot close loans without prior approval underwriting by VA unless granted automatic authority

(see next bullet).

Non-supervised Automatic Lender ¨C non-supervised lender who, after applying to VA for

authority to close loans on an automatic basis, has been formally granted such authority by VA.

Agent - person or entity that performs any portion of the work involved in originating and closing a

VA-guaranteed loan on behalf of, or in the name of, a sponsoring lender.

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