Please be advised that as per VA’s recent announcement (circular #26-18-13) concerning the recently passed “Protecting Veterans from Predatory Lending Act of 2018”, GMFS has updated our VA/VA IRRRL program guidelines.

These updates/revisions become effective May 25, 2018 and include the following:

SEASONING REQUIREMENTS

1. Applies to ALL refinances including cash-out
2.  The required seasoning is the later of:
   • The date that is 210 days after the date on which the first payment is made; and
   • The date on which the 6^th monthly payment is made on the loan

FEE RECOUPMENT

For IRRRLs, the lender must:

1.  Provide recoupment statements to VA (circular #26-18-1 and #26-18-1     Change 1)
2.  Certify that all fees and costs incurred shall be recouped on or before 36 months after the date of the loan

NET TANGIBLE BENEFIT

For IRRRLs, the lender must provide the veteran a net tangible benefit test (NTB) as  follows:

1.  If previous VA loan had a fixed rate and the new refinanced loan will have a fixed interest rate, the new refinanced loan must have an interest rate that is not less than 50 basis points (.50 in interest rate) less than the previous loan
2. If previous VA loan had a fixed rate and the new refinanced loan will have an adjustable rate, the new refinanced loan must have an interest rate that is not less than 200 basis points (2.00 in interest rate) less than the previous loan
3. Lower interest rate can’t be produced solely from discount points unless:
   • Discount points are paid at closing and
   • For discount points that are < 1 discount points, the resulting loan balance after any fees and expenses allows the property with respect to loan was issued to maintain an LTV of 100% or less and
   • For discount points that are >1 discount point, the resulting loan balance after any fees and expenses allows the property with respect to loan was issued  to maintain an LTV of 90% or less

Note:  Based on this new Net Tangible Benefit Test, please make sure an appraisal has been ordered to determine LTV, if applicable.  This appraisal would not be ordered through the VA portal.  A 2055 report or full conventional appraisal would be acceptable.