PDF Underwriting Guidelines—VA Interest Rate Reduction ...

Underwriting Guidelines--VA Interest Rate Reduction

Refinancing Loans (IRRRL)

Underwriting Guidelines (VA IRRRL Loans)

Mortgage Lending Division Version 2.7 ? 09/25/18

DOCUMENT OVERVIEW

Purpose

The following document describes the responsibilities and requirements of the Carrington Mortgage Services, LLC (CMS) Mortgage Lending Division Underwriter (Underwriter) when reviewing and underwriting VA mortgage loan applications.

Table of Contents

VA IRRRL Loan Underwriting........................................................................................ 6 VA IRRRL Definition..................................................................................................... 6 Safe Harbor Act for Appraisals .................................................................................... 6

Interest Rate and Payment changes............................................................................. 7 Interest Rate Decrease Requirement .......................................................................... 7 Payment Decrease/Increase Requirements ................................................................ 7 Payment Shock Calculation ......................................................................................... 7

The Protecting Veterans from Predatory Lending Act of 2018.................................. 8 Overview ...................................................................................................................... 8

Veteran's Statement and Lender's Certification ......................................................... 8 Requirements............................................................................................................... 8

Recoupment Period........................................................................................................ 8 Requirements............................................................................................................... 8

Net Tangible Benefit Requirements.............................................................................. 9 Requirements............................................................................................................... 9 Value Determination..................................................................................................... 9

Loan Seasoning Requirements................................................................................... 10 Requirements............................................................................................................. 10

Mortgage Payment Requirements .............................................................................. 10 Minimum Payments.................................................................................................... 10

Initial Disclosures ......................................................................................................... 11 Requirements............................................................................................................. 11

Closing .......................................................................................................................... 11 Permissible Closing Costs ......................................................................................... 11 Qualified Mortgage (QM) ........................................................................................... 11 Cash at Closing .......................................................................................................... 12

Maximum Loan Amount............................................................................................... 12 Amount of Guaranty and Entitlement Use ................................................................. 13 Maximum Loan Term.................................................................................................... 14 Title/Lien Requirements............................................................................................... 14 Obligated Parties on an IRRRL ................................................................................... 15

Requirements............................................................................................................. 15 Underwriting IRRLs When Obligors Have Changed .................................................. 16

CMS Policies & Procedures Proprietary and confidential. For Internal use only. Do not distribute externally.

Page 2 of 19

Underwriting Guidelines (VA IRRRL Loans)

Mortgage Lending Division Version 2.7 ? 09/25/18

Occupancy .................................................................................................................... 17 VA Loan Identification Number ................................................................................... 17 Credit Underwriting ...................................................................................................... 17 Prior Approval Procedures.......................................................................................... 17 Automatic Processing of IRRRLs ............................................................................... 18 Quick Reference Table................................................................................................. 19

IRRRL Features ......................................................................................................... 19

Related Documents

VA Borrower Fees and Charges

CMS Policies & Procedures Proprietary and confidential. For Internal use only. Do not distribute externally.

Page 3 of 19

Underwriting Guidelines (VA IRRRL Loans)

Mortgage Lending Division Version 2.7 ? 09/25/18

Overview (continued)

Revision History

Date 09/25/18 07/12/18

06/05/18

05/17/18 03/27/18 11/14/17 08/29/17 07/24/17 02/15/17 11/08/16 04/19/16

01/13/16 02/11/15

01/22/15

Version 2.7 2.6

2.5

2.4 2.3 2.2 2.1 2.0 1.9 1.8 1.7

1.6 1.5

1.4

Description of Change

Revised Net Tangible Benefit requirements to add rate reduction of .125% when the borrower benefit is based solely on a Term Reduction.

Revised Loan Seasoning Requirements to remove the following Note: Seasoning requirement does not apply to a VA cash-out or "regular" refinance if the principal amount of the new cash-out loan will exceed the amount of the loan being refinanced.

Added The Protecting Veterans From Predatory Lending Act of 2018 section

Revised Recoupment Period requirements. Added Net Tangible Benefit requirements. Added Loan Seasoning requirements.

Added Qualified Mortgage (QM) requirements.

Revised Veteran's Statement and Lender's Certification to add disclosure requirements that are effective 4/1/18

Added Document Images requirements.

Revised VA IRRRL Definition to add "There is no minimum FICO requirement."

Revised Credit Underwriting Requirements to remove 0x30 overlay.

Revised Mortgage Payment Requirements section.

Revised Recoupment Period Added GNMA minimum payment requirements and removed

additional 36 month verbiage

Added new Initial Disclosures section Revised Automatic Processing of IRRRLs Requirements

section

Revised the VA IRRRL Definition to add: "Refinance transactions with borrower credit scores of 500 - 549 are permitted for existing VA-guaranteed loans currently serviced by CMS only. The FISERV loan number must be verified."

Reviewed by SVP, Administration, MLD, Shared Services and the VP, Credit, MLD, Shared Services. No Changes are required.

In the Interest Rate and Payment Changes section, added the Payment Shock Calculation sub-section.

Updated the Recoupment Period section. Updated the Title/Lien Requirements section. In the Obligated Parties on an IRRRL section, updated the

following Requirements sub-sections.

Updated the Veteran's Statement and Lender's Certification section.

Added the Recoupment Period section.

CMS Policies & Procedures Proprietary and confidential. For Internal use only. Do not distribute externally.

Page 4 of 19

Underwriting Guidelines (VA IRRRL Loans)

Mortgage Lending Division Version 2.7 ? 09/25/18

Overview (continued)

Revision History (continued)

Date 01/02/15

04/04/14 01/07/14

05/24/12 (05/07/13)

Version 1.3

1.2 1.1 1.0

Description of Change

In the Closing section, updated the Permissible Closing Costs sub-section.

In the Maximum Loan Amount section, updated the Requirements sub-section.

Updated the Occupancy section.

Made changes to comply with CFPB rules effective 01/10/14: Safe Harbor Act for Appraisals

New document. Re-branded document with new logo (05/07/13).

CMS Policies & Procedures Proprietary and confidential. For Internal use only. Do not distribute externally.

Page 5 of 19

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download