On April 5, 2018 the Department of Veteran’s Affairs (“VA”) issued an FAQ to address questions regarding VA Circ. 26-18-1 (both the FAQs and Circular can be accessed here: https://www.benefits.va.gov/homeloans/resources_circulars.asp; for details about changes we made due to this Circular, please see: https://compliance.docutech.com/2018/03/01/document-updates-va-interest-rate-reduction-refinancing-loan-comparison-cx14501/).
One of the reasons for why VA Circ. 26-18-1 was issued is as follows:
“”Background. VA Pamphlet 26-7, Lenders Handbook, Chapter 6, Refinancing Loans, Section 1d, did not inform lenders when the Veteran’s statement and lender’s certification should be delivered to the Veteran. The result was that some lenders did not provide the IRRRL statement prior to loan closing. Early disclosure in the application process affords Veterans the opportunity to make informed decisions and determine if the proposed IRRRL is in their best interest. . . .
. . . lenders should . . .
Provide a Veteran’s Statement and Lender Certification (note: lender certification only needed for payment increases of 20 percent or more), as outlined in VA Lender’s Handbook, Chapter 6 section 1d. Lenders should provide this information to the Veteran with the initial disclosure documents no later than the third business day after receiving the Veteran’s application.” (VA Circ. 26-18-1)
However, further guidance on this matter is provided in the FAQs, as follows:
“Question 3: Since the Circular states that the Lender’s Certification must be provided at the time of initial disclosure if the payment increases 20 percent or more. How can we provide that certification, which is attesting that the Veteran qualifies for the principal, interest, taxes and insurance (PITI) increase, when we have not underwritten the file?
Answer: This requirement has been removed from the initial disclosure period. The lender will be required to provide the Lender’s Certification for payment increases 20 percent or more at closing, and will also be required to make this same certification in the Loan Guaranty Certificate (LGC) process.”
We are currently reviewing this change to determine any impact to our document library and/or systems and evaluating any necessary changes. Any modifications we make will be announced on our website (http://blog.docutechcorp.com/category/document-updates).