As previously announced, the Department of Vetarans’ Affairs have issued VA Circular 26-17-11 which provides (inter alia) instructions on how to properly fill out the Closing Disclosure for VA-guaranteed loans (see http://blog.docutechcorp.com/compliance-news-va-provides-new-instructions-closing-disclosure for further details). Among these instructions are the following:
“6. Corrections to the TRID-CD. As necessary, lenders may correct a TRID-CD. Corrections to the Closing Cost Details sections must break out all fees and charges in the appropriate column(s). It is unacceptable for the lender to show these corrections via a lump sum credit. . . .
6.a. Example 1 (see Exhibit A). The fees and charges shown in this example clearly exceed the allowable one percent flat fee for charges related to the cost of loan origination. . . . . The lender will be required to correct the TRID-CD to accurately reflect the lender and/or seller credits in the appropriate columns and/or refund the Veteran through a principal reduction of the loan. In cases that require a principal reduction, the lender must provide verifiable evidence that the principal reduction has occurred and that the Veteran was notified of the principal reduction.” (emphasis added)
Due to this instruction, we will now be providing a new “VA Principal Reduction Disclosure” (Cx21542) which will inform borrowers that principal reduction will be applied to the loan, due to an overcharge. This document will print under the following conditions:
- Base Type = VA
- Document Package Type = Closing
- Principal Reduction Indicator = Yes
A new global optional field prompt for Field 100160 (“Principal Reduction Indicator”) will be added to VA Closings when this field is not set.
We would also like to mention that we will continue to provide “Origination Statement Itemizing Certain HUD-1 Settlement Statement Fees and Credits” (Cx14692) under its current conditions. This will help to ensure that there is a written itemization of credits and fees for non-TRID loans. Clients who provide this document on a customized basis for TRID VA loans (or other custom documents itemizing fees and credits for VA loans) may wish to review VA Circular 26-17-11 and determine whether they wish to continue providing this document or not for such loans.
Cx21542 will start printing in packages on July 1, 2017. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
The requirements explained in VA circular 26-17-11, including evidence of notice to Veteran of principal reduction, apply to all loan Applications dated on or after July 2, 2017.
The prompt for “Principal Reduction Indicator” (field 100160) that triggers Closing document “VA Principal Reduction Disclosure” (Cx21542) will be available in ConformX production July 4, 2017.