As announced previously, a lender certification has been added to the VA IRRRL Loan Comparison (Cx14501) to verify the borrower will recoup the closing costs within 36 months of closing. In addition, a new VA IRRRL Net Tangible Benefit Form (Cx22343) prints to verify the IRRRL meets certain net tangible benefit requirements.
Cx14501 Document Edit
VA’s loan guaranty service has verified that the principal and interest payment of the new loan must be lower than the previous payment for all IRRRL’s. All references to the new payment increasing (including increasing by 20% or more) have been completely removed from Cx14501, and the “TIME TO RECOUP CLOSING COSTS” section will always print.
Several New Data Integrity Checks
To make sure the IRRRL loan terms meet the new 36-month recoupment requirement as certified in CX14501 and the new net tangible benefit requirements printing on Cx22343, the following data integrity messages will each trigger as hard stop Errors in VA IRRRL Closing packages, and as Warnings in other VA IRRRL document packages when the applicable conditions are met:
1. Data Integrity Check regarding maximum 36-month recoupment period of VA IRRRL closing costs:
The P&I portion of the mortgage payment is equal to or higher than the loan being refinanced or the months to recoup closing costs is more than 36 months. 38 USCA § 3709(a) and VA Circular 26-18-13 require the P&I payment of an IRRRL to be lower than that of the loan being refinanced and all fees and incurred costs to be recouped within 36 months after closing.
If Use Stated Values for VA IRRRL Comparison (FI120367) is Yes, the following fields are used to determine if this message displays:
- VA IRRRL – Stated Total Closing Costs (FI60148)
- VA IRRRL – Months To Recoup Based on Stated Closing Costs and Stated Monthly Payments (FI120371)
If Use Stated Values for VA IRRRL Comparison (FI120367) is NOT set to Yes, the following fields are used instead:
For Initial Disclosure and Redisclosure packages:
- Loan Estimate Veterans Total Closing Costs (FI119585)
- VA IRRRL Loan Estimate Months to Recoup Closing Costs (FI119587)
For all other package types:
- Closing Disclosure Veterans Total Closing Costs (FI119586)
- VA IRRRL Closing Disclosure Months to Recoup Closing Costs (FI119587)
2. Data Integrity Check regarding new fixed interest rate not at least 0.5% lower than old rate, when previous loan has a fixed rate:
Loan being refinanced and IRRRL are fixed rate. New interest rate must be at least 0.5% lower than the old rate, per 38 U.S.C.A. § 3709(b)(2) and VA Circular 26-18-13. Previous Loan Rate is {VALUE OF Previous Loan Rate (FI6681)}% and new Interest Rate is {VALUE OF Interest Rate (FI1005)}%.
3. Data Integrity Check regarding new ARM rate not at least 2% lower than old rate, when previous loan has a fixed rate:
Loan being refinanced is fixed rate, while the IRRRL is adjustable rate. New interest rate must be at least 2.0% lower than the old rate, per 38 U.S.C.A. § 3709(b)(3) and VA Circular 26-18-13. Previous Loan Rate is {VALUE OF Previous Loan Rate (FI6681)}% and new Interest Rate is {VALUE OF Interest Rate (FI1005)}%.
The following fields are used in the triggering of checks 2 and 3 above:
- Previous Loan Amortization (FI6680)
- Previous Loan Rate (FI6681)
- Amortization Type (FI99)
- Interest Rate (FI1005)
4. Data Integrity Check concerning LTV over 100% for Discount Points of 1% or less:
Loan-to-Value must be 100% or less if discount points of 1% or less are charged on an IRRRL, per 38 U.S.C.A. § 3709(b)(4)(B)(i) and VA Circular 26-18-13. LTV on this loan is {VALUE OF Loan to Value Ratio (FI1075)}% and Discount Points are {VALUE OF 802. Loan Discount Fee At (%)(FI1055)}%.
5. Data Integrity Check concerning LTV over 90% for Discount Points over 1%:
Loan-to-Value must be 90% or less if discount points over 1% are charged on an IRRRL, per 38 U.S.C.A. § 3709(b)(4)(B)(ii) and VA Circular 26-18-13. LTV on this loan is {VALUE OF Loan to Value Ratio (FI1075)}% and Discount Points are {VALUE OF 802. Loan Discount Fee At (%)(FI1055)}%.
The following fields are used in the triggering of checks 4 and 5 above:
- Loan to Value Ratio (FI1075)
- Loan Discount Fee At (%) (FI1055)
New System Default
The fields used in the new VA IRRRL data integrity checks are all fields already in use in standard documents except for a new System Default field:
- Enable VA IRRRL Data Integrity Checks (FI121985)
New System Default “Enable VA IRRRL Data Integrity Checks” can be changed to “No” inside ConformX System Default Settings, “Data Integrity Settings” tab, on a per-institution basis to turn the new VA IRRRL data integrity checks off completely. If needed, custom field mappings can be requested to set the field to “No” when specific conditions are met.
The new data integrity checks and updated Cx14501 are now on the Stage server for testing and will be added to Production servers on June 23, 2018. The new system default is already available in ConformX. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
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