Podcast
Questions and Answers
What must be obtained before ordering an appraisal for a VA loan?
What must be obtained before ordering an appraisal for a VA loan?
How should lenders verify a Veteran's eligibility for home loan benefits?
How should lenders verify a Veteran's eligibility for home loan benefits?
By obtaining a Certificate of Eligibility (COE) in WebLGY.
Which of the following are included in unrestricted transfers of ownership? (Select all that apply)
Which of the following are included in unrestricted transfers of ownership? (Select all that apply)
The appraised value of a property is established before ordering an appraisal.
The appraised value of a property is established before ordering an appraisal.
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VA requires a servicer to change records if the agreement allows the contract purchaser to make payments directly.
VA requires a servicer to change records if the agreement allows the contract purchaser to make payments directly.
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What document must be uploaded to WebLGY for prior approval loans?
What document must be uploaded to WebLGY for prior approval loans?
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What must servicers retain for at least 3 years?
What must servicers retain for at least 3 years?
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What information must lenders provide when requesting a Certificate of Eligibility (COE)?
What information must lenders provide when requesting a Certificate of Eligibility (COE)?
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The contract seller is responsible for forwarding payment coupons and other information to the ______.
The contract seller is responsible for forwarding payment coupons and other information to the ______.
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Match the following documentation requirements with their descriptions:
Match the following documentation requirements with their descriptions:
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The procedures for loan processing must all be completed prior to __________.
The procedures for loan processing must all be completed prior to __________.
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What must be established to ensure compliance with VA's occupancy requirement?
What must be established to ensure compliance with VA's occupancy requirement?
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What happens if the lender does not provide the required documents?
What happens if the lender does not provide the required documents?
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When must a loan be reported to VA after closing?
When must a loan be reported to VA after closing?
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Servicers without automatic authority can approve loan assumptions.
Servicers without automatic authority can approve loan assumptions.
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What is required for a VA loan to close if the Veteran is no longer on active duty?
What is required for a VA loan to close if the Veteran is no longer on active duty?
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What must the servicer develop and submit if neither they nor the holder has automatic authority?
What must the servicer develop and submit if neither they nor the holder has automatic authority?
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What must happen for transfers of ownership on properties with loan commitments made after March 1, 1988?
What must happen for transfers of ownership on properties with loan commitments made after March 1, 1988?
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Which of the following is NOT a requirement to approve the transfer of ownership?
Which of the following is NOT a requirement to approve the transfer of ownership?
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Servicers without automatic authority have 21 days to submit documents to VA after receiving a complete application package.
Servicers without automatic authority have 21 days to submit documents to VA after receiving a complete application package.
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What must a seller do if their application for ownership transfer is disapproved?
What must a seller do if their application for ownership transfer is disapproved?
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What happens if an ownership transfer was conducted without prior approval?
What happens if an ownership transfer was conducted without prior approval?
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In cases of divorce, what fee may a servicer charge when processing a release of liability?
In cases of divorce, what fee may a servicer charge when processing a release of liability?
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What is required from the purchaser to allow for the restoration of entitlement after a VA loan assumption?
What is required from the purchaser to allow for the restoration of entitlement after a VA loan assumption?
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Unrestricted transfers require prior approval by a loan holder or VA.
Unrestricted transfers require prior approval by a loan holder or VA.
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Study Notes
Order of Completion
- Procedures for VA loan processing can be completed in any order except for obtaining the Certificate of Eligibility (COE), which must come first.
- COE is required before requesting an appraisal and applies to both prior approval and automatic loans.
- Early actions recommended include obtaining the COE, requesting appraisal assignment, initiating CAIVRS, and obtaining a credit report.
Obtaining a Certificate of Eligibility
- Verify eligibility for VA home loan benefits through COE in WebLGY.
- Lenders should prefer online COE requests for efficiency; veterans can apply via eBenefits.
- COE is accessible to lenders with required data points.
- Changes to COE require a new or updated certificate to ensure loan eligibility.
Establishing Value of Property
- Appraisal reports are uploaded to WebLGY after ordering.
- The Staff Appraisal Reviewer issues a Notice of Value (NOV), which must be complied with by the lender.
VA's Occupancy Requirement
- The loan cannot close unless the veteran meets VA’s occupancy requirement, critical for compliance.
Underwriting the Loan
- Complete all required procedures, verifications, and maintain consistency across documentation.
- Resolve discrepancies such as dependent counts and monthly obligations during the underwriting process.
Requirements for Active Duty Servicemembers
- Counseling via VA Form 26-0592 is mandatory for active duty servicemembers to ensure they are still on active duty at closing.
- If active duty status changes, re-establish eligibility may be necessary using appropriate documentation.
Obtaining a Certificate of Commitment on Prior Approval Loans
- Upload prior approval loans to WebLGY for VA review.
- A Certificate of Commitment is issued once approved, detailing conditions for closing.
Document Submission Process
- Lenders must submit documents to VA only for loans requiring prior approval or upon VA's request.
- WebLGY should be utilized for all document submissions.
VA Loan Number
- Each loan gets a 12-digit VA Loan Identification Number (LIN) upon appraisal request, vital for processing accuracy.
Document Signatory Guidelines
- Specific parties must sign loan documents under VA requirements; else, it falls to branch managers or agents.
Electronic Document Submission
- Lenders may submit electronic documents, needing to ensure record integrity to satisfy VA audit requirements.
Submission of Loans for Prior Approval
- Lenders lacking automatic authority should work with VA-approved lenders.
- Specific loans such as joint loans and those with fiduciaries require prior approval.
Pre-Submission Procedures
- Before submitting a loan package for prior approval, establish property value, complete underwriting, and ensure compliance with counseling requirements.
Requesting Prior Approval
- Specific documentation and order requirement for purchase and refinance loans must be adhered to when uploading to WebLGY.
IRRRL Prior Approval Requirements
- IRRRLs refinancing loans past due by 30+ days require prior approval and analysis of the delinquency.
Document Requirements for IRRRL Prior Approval
- Specific information and documentation must be uploaded to WebLGY for IRRRL approval packages.
VA's Review of Prior Approval Applications
- VA reviews submissions within 10 business days, which may be extended for loans involving pension income or fiduciaries.
Certificate of Commitment Importance
- The certificate of commitment is needed prior to closing as evidence of loan guaranty.
Conditional Commitment Certificates
- Special conditions may be attached to a commitment, requiring specific documentation to avoid delays.
Reporting Loan Closing and Guaranty Request
- Loans must be reported within 60 days of closing; failure to comply requires a written explanation.
Requesting Guaranty from VA
- Use WebLGY for electronic loan guaranty certificates, with exceptions outlined.
Documents Required for LGC Issues
- Specific documents should be uploaded when electronic LGC cannot be obtained for proper review.
Full File Loan Review Procedures
- Lenders notified for full file loan reviews must upload complete files within specified time limits, maintaining proper document order.
Other Necessary Documents
- Verifications and forms required by VA or to clarify aspects of the loan must be included.
Loan Assumption Processing Guidelines
- Loan assumptions should be processed by current servicers with automatic authority; failures require submissions for prior approval.
Servicers with Automatic Authority
- These servicers can process assumption requests and must adhere to VA underwriting guidelines.
Servicers without Automatic Authority
- Must submit credit packages to those with automatic authority for processing assumption requests.
Ownership Transfers in Loans Post-March 1988
- Transfers of ownership require approval from the loan holder or their servicing agent if they have automatic authority.
Approval Requirements for Ownership Transfer
- The loan must be current, the purchaser must be creditworthy, and all loan obligations must be acknowledged for transfer approval.### Maximum Processing Fees
- Fees for processing assumption approval and loan record changes capped at lesser of: $300 (automatic authority) + credit report cost or $250 (no automatic authority) + credit report cost, or any state law maximum.
- If collected before the sales contract is signed and application is denied, $50 portion for record change must be refunded to the seller.
- VA advises processing fees should accompany complete applications.
Processing Time Guidelines
- Servicers with automatic authority must complete underwriting and notify the seller within 30 days of a complete application.
- Servicers without automatic authority need to submit documents to VA within 21 days of receiving a complete application.
- VA has 10 business days for underwriting review and 7 days for servicers to notify parties of the decision.
Decision Notices
- If an application is approved, servicer informs the seller with assumption instructions, funding fee details, and necessary paperwork.
- In case of disapproval, sellers and purchasers receive notices detailing reasons and appeal instructions within 30 days.
- Disapprovals for credit reasons must provide basis in accordance with Fair Credit Reporting Act; refunds of $50 fee apply after 45 days if disapproved.
VA Appeals
- Appeals against disapproval can be made to VA RLC within 30 days.
- VA requests the servicer to send application packages within 7 days for review.
- If the assumption is approved upon appeal, the servicer must close assumptions within 30 days and inform the seller they remain liable.
Steps After Approval
- Once approved, the servicer must complete the loan transfer in compliance with federal, state, and local regulations.
Assumption Clause
- VA-approved assumption clause is mandatory in property deed; servicers must ensure it meets compliance with local laws and regulations.
Agreement Creating Liability
- If a proper assumption clause is missing but requirements are fulfilled, an "Agreement Creating Liability to Holder and to United States" must be prepared and executed by all parties involved.
Funding Fee
- At the loan transfer, a funding fee of 0.5% of the loan balance is due from the purchaser to the servicer.
- No funding fee required for unrestricted transfers; payment is due within 15 days of assumption.
Notification to VA
- Servicers are required to notify VA post-ownership transfer and submit necessary documentation in a closing package.
Assumptions without Prior Approval
- Servicers must notify VA within 60 days of unapproved transfers, indicating whether foreclosure will be pursued or if retroactive approval will be sought.
- Purchaser must meet eligibility criteria for retroactive approval, such as paying the funding fee and assuming obligations.
General Release of Liability Procedures
- VA-guaranteed loans prior to March 1, 1988, can be transferred without prior approval; servicers can charge processing fees.
Release of Liability Procedures for Divorce
- Veterans can seek release from personal liability if a spouse acquires property through divorce; servicers may charge normal processing fees.
Substitution of Entitlement
- Veterans may request restoration of entitlement after a loan assumption; specific conditions must be met for approval.
Unrestricted Transfers
- Certain transfers do not require prior approval; servicers can charge nominal fees for record changes but not for funding fees.
Documentation Requirements
- Servicers do not need to change records for payments; maintaining documentation for all transactions for three years is mandatory.
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Description
This quiz focuses on Chapter 5 of VA Loans, emphasizing the order of completion for necessary procedures. Learn the critical steps to process VA loans and understand the importance of the Certificate of Eligibility in the loan process. Perfect for anyone looking to enhance their knowledge in VA loan processing.
