Following a review of VA documents, we have created new fields for Cx14501, VA Interest Rate Reduction Refinancing Loan Comparison and Lender Certification, in order to more closely comply with the language of the VA Lender’s Handbook.
VA Lender’s Handbook, Chapter 6, 1(c), Payment Decrease/ Increase Requirements, states in part:
“If the monthly payment (PITI) increases by 20 percent or more, the lender must:
- determine that the veteran qualifies for the new payment from an underwriting standpoint; such as, determine whether the borrower can support the proposed shelter expense and other recurring monthly obligations in light of income established as stable and reliable, and
- include a certification that the veteran qualifies for the new monthly payment which exceeds the previous payment by 20 percent or more.”
Chapter 6, 1(d), Veteran’s Statement and Lender’s Certification, states in part:
“For all IRRRLs, the veteran must sign a statement acknowledging the effect of the refinancing loan on the veteran’s loan payments and interest rate.
The statement must show the interest rate and monthly payments for the new loan versus that for the old loan. The statement must also indicate how long it would take to recoup ALL closing costs (both those included in the loan and those paid outside of closing).
If the monthly payment (PITI) increases by 20 percent or more, the lender must include a certification that the veteran qualifies for the new monthly payment which exceeds the previous payment by 20 percent or more.”
These sections seem to define the “monthly payment” to include the monthly principal, interest, taxes, and insurance, or “PITI”. Previously, our calculation of the “monthly payment” did not include the tax and insurance values. The new fields make us of existing data to now include the taxes and insurances for both the “Monthly payment” and the “Proposed Monthly payment”.
Besides adding the new fields, we have also modified the document logic to not print the “Lender Certification” portion at the bottom, except when the new mortgage payment (the Proposed Monthly payment) is more than 20% larger than the current Monthly payment.
These document changes will take effect immediately. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.
DR 213065