VA Activity

Browse articles from all of our Newsletters related to VA Activity.

May 26, 2017 - Inside FHA/VA Lending

VA Clarifies Use of Comparables In Appraisals of Remote Properties

Difficulty coming up with comparable home sales data in rural areas has prompted the Department of Veterans Affairs to clarify its requirements for comparable sales for VA appraisals. The VA lender handbook requires comparable sales in appraisal reports to be located as near as possible to the property. Compliance with the requirement has been particularly difficult for VA lenders in rural and certain urban areas, where properties are a good distance apart. According to VA Circular 26-17-14, VA does not set a minimum or maximum distance between properties for an appraisal but requires that “comparable sales should be located as close to the subject as practical.” In cases where obtaining data is a problem because properties may be many miles from the subject property, appraisers should explain why those comparable sales were used and how they compare and/or compete with the ...

May 26, 2017 - Inside FHA/VA Lending

VA LPOs School Lenders on Lending To Incapacitated Vet Borrowers

Loan processing for incompetent veterans presents significant challenges to VA lenders, requiring strict compliance with special guidance on top of the basic VA underwriting rules. One challenge is dealing with legal appointees who assist and represent veterans in legal transactions, such as applying for a mortgage loan. There are ways to determine whether a veteran is incompetent, said Mark Jamison, loan production officer (LPO) with the VA Cleveland Regional Center, during the VA Lender Conference in Kansas City, MO, last month. The Department of Veterans Affairs or a probate court can deem a veteran incompetent due to severe injury, medical conditions, mental disorders, and financial instability, he said. A mortgage lender could make a determination of incompetency if the initial purchase contract documents were signed by an attorney-in-fact, the veteran divulged the incompetency, or the ...

May 26, 2017 - Inside FHA/VA Lending

VA Explains Certificate of Eligibility Process, Entitlement Restoration

Requesting a certificate of eligibility (COE) may be just a click away but the process is not without pitfalls, cautioned a panel of VA loan production officers during an industry conference. The panelists – Maxine Henry, program analyst with the VA Central Office; Ricardo Holloway, loan production officer with the Atlanta Regional Loan Center; and Paula Jesse, assistant loan production officer with the Denver RLC – urged veterans to order their COE early in the loan-application process to avoid any hiccups. A COE verifies to the lender that the veteran/borrower is eligible for a VA loan. Ordering early would help prevent last-minute delays, said Henry. “It is a problem if the veteran is at the closing table and still does not have a COE because it was ordered just a few days prior to closing,” Henry noted. Other potential hitches are incorrect documentation or receiving a VA determination that the ...

May 26, 2017 - Inside FHA/VA Lending

VA Production Drops in 1Q17 as Refinancing Train Loses Steam

VA originations saw a significant drop during the first three months of 2017 as refinancing continued to slow, according to an Inside FHA/VA Lending analysis of agency data. Lenders closed $42.9 billion of VA loans in the first quarter, down 28.1 percent from the previous quarter The numbers show purchase mortgages continued to drive VA originations. A slowdown in VA refinancing appears to be the key factor in the decline. Refis accounted for 27.7 percent of total VA production, down from the fourth quarter of 2016. A change in Ginnie Mae’s pooling rules aimed at discouraging churning has taken much of the steam out of the once-booming VA refi segment. The steep drop in volume ended an upward quarter-to-quarter trend in VA originations last year. Eight of the top 10 VA lenders saw huge quarter-over-quarter declines in their VA lending, with top-ranked Freedom Mortgage posting the largest ... [ Charts ]

May 12, 2017 - Inside FHA/VA Lending

FY 17 Spending Bill Passed, FHA, Ginnie Mae Budgets Unchanged

Appropriation levels for FHA and Ginnie Mae from the previous fiscal year were unchanged in the FY 2017 omnibus spending bill, which President Trump signed into law on May 5. The bill, which passed the House by a 309-118 vote and the Senate by a 79-18 vote on May 4, will fund the federal government through the rest of the fiscal year ending Sept. 30, 2017. Among other things, the bill allocates $400 billion to single-family guarantee commitments under the FHA Mutual Mortgage Insurance Fund, and provides $130 million for administrative contract expenses. In addition, the budget provides an additional $30 million if guaranteed loan commitments exceed $200 billion. The agreement also sets aside up to $30 billion for FHA multifamily and specialized loan guarantees during FY 2017. A total of $55 million was set aside for housing counseling programs, $65.3 million for fair housing activities, and $4 million to ...

May 12, 2017 - Inside FHA/VA Lending

VA Instructs Lenders on Completing Streamline Refinance Worksheet

The Department of Veterans Affairs has issued guidance clarifying its requirements for completing the Interest Rate Reduction Refinance Loan Worksheet. The guidance is effective for all IRRRL applications originated on or after July 2, 2017. The VA said it has received many inquiries from lenders regarding the proper completion of IRRRL Worksheet (VA Form 26-8923) since the implementation of the TRID-LE and CD (Truth in Lending Act-Real Estate Settlement Procedures Act Integrated Loan Estimate and Closing Disclosure.) The guidance clarifies and establishes VA policy regarding the following: Amount of the existing allowable loan balance (Line 1); Principal reduction from veteran (Line 2); Maximum allowable discount points (Line 5); Maximum allowable closing costs (Line 8); Maximum allowable closing costs (Line 11); and Maximum loan amount (Line 18). VA said it understands the ...

May 12, 2017 - Inside FHA/VA Lending

VA Clarifies QM Safe Harbor Rules For Streamlined Refinancings

The Department of Veterans Affairs’ interim final rule on qualified mortgages (QM) implements the Dodd-Frank provision requiring creditors to make a reasonable and good faith determination that the borrower has a reasonable ability to repay the loan. The VA interim final rule defines QM to mean any loan that the agency guarantees, insures or originates. However, certain limitations apply to VA’s Interest Rate Reduction Refinance Loans (IRRRLs) in the rule’s guidance for “safe harbor.” Under the safe harbor requirements for an IRRRL, the loan being refinanced must have been originated at least six months before the new loan’s closing, and six payments must have been made. In addition, the veteran should not have been more than 30 days past due during the six months preceding the new loan’s closing. The QM rule’s six-month seasoning requirement, however, inadvertently created an ...

May 12, 2017 - Inside FHA/VA Lending

VA Explains Characteristics of an ‘Egregious Loan,’ Discusses Cases

What is an “egregious” VA mortgage loan? Panelists at last month’s VA Lending Conference in Kansas City, MO, helped shed light on such loans by describing them as flawed and in violation of VA requirements. “But there’s more,” said Greg Nelms, VA chief of loan policy. Unstable income and use of active-duty income when that income will be extinguished within one year could taint a VA loan and make it egregious, said Nelms. High debt-to-income ratio, residual income that is below VA requirements and failure to consider a spouse’s debts or credit in a community-property state also could have an adverse effect on a VA loan, he added. The panel presented several “egregious loan” scenarios involving reviews of several mortgages from 2016 in which lenders were required to sign indemnification agreements. The first example consisted of a VA home loan for $102,047, which closed in ...

April 28, 2017 - Inside FHA/VA Lending

Millions of Disabled Vets Unware of VA Home Loan Benefit, Experts Say

Millions of disabled post-9/11 veterans may qualify for a VA-guaranteed home mortgage but the majority are not taking advantage of the program, according to a new report from American Financing. The VA loan is great for injured veterans exiting the military but many are either unaware or uninformed, said Greg Vogel, manager of American Financing in Aurora, CO. Active-duty servicemembers and retired military are entitled to VA housing benefits, including an agency guarantee on their mortgage in lieu of mortgage insurance and no downpayment. A first-time VA borrower pays a 2.15 percent funding fee. Borrowers with a service-connected disability are exempt from paying the fee. “You would expect many of our injured warriors would take advantage of this great loan but that’s not what the numbers indicate,” said Vogel, who left the Army as a disabled vet Tim Byers, a mortgage analyst at ...

April 28, 2017 - Inside FHA/VA Lending

VA Issues New Loss-Mitigation Option to Help Vets Retain Homes

The Department of Veterans Affairs has issued new guidelines and instructions for modifying VA-guaranteed mortgages in lieu of previous guidance regarding the agency’s Home Affordable Modification Program (HAMP). VA has a long-standing policy of encouraging servicers to work with borrowers to explore all reasonable options to help them keep their home or reduce losses through loss mitigation. The agency requires lenders to consider VA-guaranteed loans for a VA Affordable modification (VAAM) when traditional home-retention options are not feasible. A VAAM allows a new monthly, fixed-rate mortgage payment no greater than 31 percent of the borrower’s monthly gross income. It can cover principal, interest, property taxes, insurance and condominium or homeowner association fees The rate must not exceed the most recent Freddie Mac benchmark rate for ...

April 28, 2017 - Inside FHA/VA Lending

VA Issues Guidance for Recording Fees, Charges on TRID-CD Form

The Department of Veterans Affairs has issued guidance regarding documentation of allowable fees and charges under the Consumer Financial Protection Bureau’s Truth in Lending Act-Real Estate Settlement Procedures Act Integrated Disclosure Closing Disclosure, or TRID-CD form. Under the guidance, VA lenders must document all allowable fees and charges assessed against the borrower as well as any lender and seller credits on the TRID-CD. VA now requires documentation because it no longer accepts a separate, itemized list of credits and charges, as previously allowed with the HUD-1 form. In completing the closing-cost section of the TRID-CD, fees charged to the veteran must be listed in the “Borrower Paid” column. Lender credits should be listed in the “Paid by Others” column, the agency said. Closing costs that are paid for by either the seller or the lender must be placed in either the ...

April 28, 2017 - Inside FHA/VA Lending

VA Seeks Public Input on Ways to Make VA Loans More Competitive

The VA Home Loan Guaranty Service is revisiting agency rules on allowable fees and charges veterans pay to obtain a VA loan for possible changes. VA is seeking comments on a proposed rule that would ease current restrictions to put borrowers in a better position to bargain during negotiations for a home purchase. While the current rule continues to protect veterans from incurring unreasonable closing costs as originally intended, some veterans and their representatives have complained that the restrictions weaken their ability to negotiate with sellers and lenders. Compared with a conventional purchase-loan transaction, sellers and lenders find it more difficult to deal with a borrower with a VA loan because they end up bearing many of the customary fees and charges, the VA explained. “The restrictions on fees and charges puts borrowers at a bargaining disadvantage against ...

April 28, 2017 - Inside FHA/VA Lending

FHA/VA Default Rates Down In Seasonal Shift in Early 2017

Mortgage default rates for FHA and VA loans followed seasonal trends and shifted significantly lower in the first quarter of 2017, according to a new analysis and servicer ranking by Inside FHA/VA Lending. While both portfolios showed strong growth in the dollar volume of loans outstanding in Ginnie Mae mortgage-backed securities, there were also huge declines in the number of loans past due. Some $1.036 trillion of FHA forward mortgages were in Ginnie pools at the end of March, up 1.1 percent from the previous quarter. But delinquency rates for the less-severe categories of late payment were down sharply. The number of FHA loans 30-60 days past due, for example, declined by 28.4 percent, lowering the delinquency rate by 1.51 percentage points, leaving it just about where it was a year ago. The same thing happened in the VA sector. Total VA supply grew 3.2 percent to ... [Charts]

April 21, 2017 - Inside MBS & ABS

GNMA Attributes VA Refi Drop to Anti-Churning Rule As Agency Monitoring of Serial Refinancing Continues

A significant drop in the VA refinance market in the first quarter is proof that Ginnie Mae’s anti-churning policy has been effective in curbing serial refinancing of VA loans, according to agency officials at the recent VA Lenders Conference in Kansas City, MO. A hefty 42.7 percent decline in VA refi volume during the first three months of 2017 reflects an apparently successful effort by Ginnie to stop the practice of refinancing VA loans within six months of closing. By comparison, securitization of VA purchase loans fell 17.3 percent from the fourth quarter. John Getchis, senior vice president at Ginnie, said...

April 20, 2017 - Inside Mortgage Finance

VA Says Appraiser Shortage Only in Rural Areas, But NAR Says Problem is Worse than It Seems

The problem with the perceived appraiser shortage is not whether VA has enough appraisers but whether there are enough of them in areas where appraisal demands are greater, according to a ranking member of the VA Fee Panel of the Department of Veterans Affairs. As of April 8, 2017, the Fee Panel had 5,006 licensed and certified appraisers working in the eight regional loan centers (RLC) that administer the VA Home Loan Guaranty program, said Kevin Eason, valuation officer with the Denver RLC. Last year, 553 new appraisers were appointed to the panel, whose members accept VA appraisal assignments on a rotating basis. Speaking last week at the annual VA Lenders Conference in Kansas City, MO, Eason noted...

April 14, 2017 - Inside FHA/VA Lending

Patenaude for DepHUDSEC? Bright To Replace Tozer at Ginnie Mae?

The Trump White House has yet to fill key positions at the Department of Housing and Urban Development and agencies that fall under the HUD umbrella, including the FHA and Ginnie Mae. According to industry officials who claim to have some knowledge of the process, the administration is seriously considering Pam Patenaude to be the deputy HUD secretary. Patenaude is president of the J. Ronald Terwilliger Foundation for Housing America’s Families. She served as HUD assistant secretary for community, planning and development during the George W. Bush administration. Meanwhile, Michael Bright has been mentioned as a candidate to be the next president of Ginnie Mae. Bright currently serves as director, Center for Financial Markets at the Milken Institute. During his career he has worked for mortgage lender/servicer PennyMac, investment banking firm BlackRock and ...

April 14, 2017 - Inside FHA/VA Lending

GNMA Servicing Market Thawing? Stakeholders Hope as Market Stirs

When it comes to selling Ginnie Mae mortgage servicing rights the past two years, it’s been mostly a bear market, but all that may be changing soon. At least that is what sellers and their merger and acquisition advisors hope. Mark Garland, executive vice president of MountainView Financial Solutions, Denver, said that of late, “We have seen a few Ginnie trades go off at a level closer to full value.” Garland told Inside FHA/VA Lending that he expects this trend to continue with prices tightening over the summer “provided rates hold and [prepayment] speeds stay largely in line with expectations.” And if that happens, there could be an increase in the ability of FHA/VA lenders to securitize excess cash flows. But that’s getting a little ahead of the equation. Over the past 24 months, the Ginnie MSR market has been difficult for two reasons: the fear of lawsuits/sanctions tied to FHA lending, and fast ...

April 14, 2017 - Inside FHA/VA Lending

GNMA Officials Attribute Decline in VA Refis to Anti-Churning Policy

A steep drop in VA-backed securities issuance in the first quarter of 2017 suggests that Ginnie Mae’s efforts to curb serial refinancing of VA loans are working, according to agency officials. Speaking on a panel at the annual VA Lenders Conference in Kansas City, MO, this week, Ginnie executives said that a change in pooling requirements for streamlined refinance mortgages appears to have curbed a destructive appetite for refinancing new VA loans within six months of closing. The practice has caused faster prepayments in Ginnie mortgage-backed securities pools and smaller payouts to investors. VA refi volume fell 42.7 percent from the previous quarter (see chart on page 2), contributing significantly to the 32.2 percent decline in total VA loan securitization during the period. John Getchis, senior vice president at Ginnie Mae, said he does not think the churning trend will continue because the ...

April 14, 2017 - Inside FHA/VA Lending

PennyMac Claims Top Rank in Ginnie MBS Production in 1Q17

There is a new boss in the Ginnie Mae mortgage-backed securities market. PennyMac Financial rose to the top of the issuer ranking in the first quarter of 2017 despite a sharp decline in volume, according to a new analysis and ranking by Inside FHA/VA Lending. PennyMac issued $10.78 billion of single-family Ginnie securities during the first three months of the year. The figures in this analysis are based on Ginnie loan-level disclosures, which truncate loan amounts to $1,000 increments. PennyMac’s first-quarter production was off 27.9 percent from the fourth quarter of 2016, a slightly bigger decline than the 24.8 percent drop in overall Ginnie issuance. Even though the firm fared slightly worse than the total market, its first-quarter downturn was less severe than Wells Fargo’s. Wells has been the top Ginnie producer for a long time, as well as the top player in most segments of the ... [ Charts ]


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