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Our Commitment to You

Fairway Wholesale Lending

VA Lending – Interest Rate Reduction Refinance Loan

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Agenda

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• VA IRRRL• Highlights• Eligibility• Calculating Loan Amount• Safe Harbor

o Fee Recoupmento Seasoning

• Funding Fee• Required Documentation• Allowable Fees & Charges• COE• IRRRL Case Number• Allowable Fees• Funds to Close

What is a VA IRRRL

A VA IRRRL is a VA-guaranteed loan made to refinance an existing VA-guaranteed loan, generally at a lower interest rate than the existing VA loan, and with lower principal and interest payment than the existing VA loan.

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Fairway VA IRRRL Highlights

• Fixed Rate - Minimum FICO 600 • ARM – Up to $1,000,000 – Minimum FICO 620• ARM – $1,000,001-$1,500,000 – Minimum FICO 700• Terms: Fixed – 15, 20 and 30; ARM and High Balance - 30• All Borrowers must have at least 1 credit score• No maximum LTV/CLTV because no appraisal is required• Calculation of DTI is not required• The 25% minimum guaranty is considered satisfied for IRRRLs regardless of

the dollar amount of guaranty being transferred from the previous loan• Funding Fee may be financed• Manual underwrite – no AUS required

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Fairway VA IRRRL Highlights, (Contd.)

• Appraisals not required (unless discount points are being paid)• Second Home and Investments may be eligible with certificate of previous

residency• 1-4 unit (attached and detached), PUD, Condo and Accessory Dwelling Units

are eligible• VA IRRRLs do not require VA condominium approval• No new secondary financing is allowed

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Who Can Qualify?

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Parties Obligated on Old VA Loan Parties to be Obligated on new IRRRL Is IRRRL Possible?

1 Unmarried veteran Veteran and new spouse Yes2 Veteran and spouse Divorced veteran alone Yes3 Veteran and spouse Veteran and different spouse Yes

4 Veteran alone Different veteran who has substituted entitlement Yes

5 Veteran and spouse Spouse alone (veteran died) Yes

6Veteran and nonveteran joint loan

obligorsVeteran alone Yes

7 Veteran and spouse Divorced spouse alone No8 Unmarried veteran Spouse alone (veteran died) No

9 Veteran and spouse Different spouse alone (veteran died) No

10Veteran and nonveteran joint loan

obligorsNonveteran alone No

Calculating Loan Amount

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Minimum: No minimum.Maximum: $1,500,000.00

Complete VA Form 26-8923 IRRRL Worksheet to determine max loan amount.

Loan amount may include:• Unpaid principal balance (including accrued interest and late fees, if applicable),• Allowable fees and charges,• Prepaid expenses,• Maximum 2 discount points,• VA funding fee.

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VA IRRRL Safe Harbor

QM Safe Harbor: IRRRLs meeting all of the following criteria are classified as Safe Harbor QMs:• The loan being refinanced was funded at least six months prior to the new loan's closing date and at least 6

payments have been made on the original loan and• The veteran has not been more than 30 days past due during the six months preceding the new loan’s

closing date and• The number of months to recoup the allowable fees and charges associated with the loan does not exceed

36 months and o Fairway requires that the "Months to Recoup" section of the FWL VA IRRRL Cost Recoupment and

Lender Certification Worksheet is completed for all VA IRRRLs where the a decrease in the monthly P&I is evidenced.

Effective for all IRRRL applications on and after 07/15/2019, per VA Clarification:• Loans not meeting VA's fee recoupment requirements for any reason, including when the P&I is increasing

may not fully credit qualify to avoid meeting the fee recoupment requirements. VA IRRRL's not meeting fee recoupment requirements are no longer eligible to proceed with the VA IRRRL product.

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VA IRRRL Seasoning Requirements

VA Refinance Seasoning Requirements for all VA IRRRLs

The Note Date of the New Fairway Refinance Loan

Must be on or after the later of:• 210 days after the date the first payment was made* on the mortgage

being refinanced, and• 6 full monthly payments have been made on the mortgage being

refinanced.

All mortgage backed VA-guaranteed refinance must meet the conditions above.FWL VA IRRRL Net Tangible Benefit Loan Seasoning and

Fee Recoupment Requirements Job Aid

* cancelled check or bank statement withdrawal

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VA IRRRL Seasoning Requirements

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VA IRRRL Fee RecoupmentRequirement

All fees and incurred costs must be recouped within 36 months from the note date of the new IRRRL. There are no exceptions.

The VA IRRRL Cost Recoupment and Lender Certification Worksheet must be completed and included with loan submission.

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VA IRRRL Funding Fee

• Unless verified as exempt, the veteran must pay a funding fee.

• The Veteran’s funding fee exempt status is shown on the COE.

• The funding fee may be financed in the loan or the Veteran may pay the funding fee in cash.

• Funding fee is .50%.

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VA IRRRL Required Documents

• VA IRRRL Submission Checklist• Credit Report - Mortgage Only report is

acceptable (non-qualifying)• Case Assignment - obtained from VA portal• Certificate of Eligibility• 1003, Complete all sections except for the

following: o assets if not needed for closing,o income,o any debts and liabilities other than

outstanding mortgages being paid off

• VA Form 26-1802A• VA Form 26-8937• VA Rate Reduction Certification• VA IRRRL Cost Recoupment Worksheet• VA Form 26-8923• Clear CAIVRS• Written or verbal VOE

Request for Certificate of Eligibility

The COE can be accessed at http://vip.vba.va.gov• Input required information• COE determination will come back within seconds

The Vet can order COE at https://www.ebenefits.va.gov/ebenefits/homepage• Click on Certificate of Eligibility for Home Loan• Register for Account

If you receive an “unsuccessful” message, do the following:• Select “Electronic Application” to complete an online

request. Enter required information.• Mail VA Form 26-1880, Request for Certificate of

Eligibility and Evidence of Service to:VA Loan Eligibility CenterP.O. Box 100023Decatur, GA 30031(888) 768-2132

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Example of Certificate of Eligibility

Funding FeeExempt/Non Exempt

Entitlement Eligibility

Entitlement Codes

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Order IRRRL Case Number

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Order IRRRL Case Number, cont.

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Allowable Itemized Fees and Charges

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VA Allowable Fees & Charges: The veteran can pay a maximum of:

• reasonable and customary amounts for any or all of the "Itemized Fees and Charges" designated by VA, plus

• a one percent flat charge by the lender, plus• reasonable discount points.

Non-Allowable Fees

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The following list provides examples of items that cannot be charged to the veteran as “itemized fees and charges.” Instead, the lender must cover any cost of these items out of its flat fee:

• lender's appraisals• lender's inspections, except in construction

loan cases• loan closing or settlement fees• document preparation fees• preparing loan papers or conveyancing fees• attorney's services other than for title work• photographs• interest rate lock-in fees• postage and other mailing charges, stationery,

telephone calls, and other overhead• amortization schedules, pass books, and

membership or entrance fees

• escrow fees or charges• notary fees• commitment fees or marketing fees of any secondary

purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser

• trustee's fees or charges• loan application or processing fees• fees for preparation of truth-in-lending disclosure

statement• fees charged by loan brokers, finders or other third

parties whether affiliated with the lender or not, and• tax service fees.

VA IRRRL Funds to Close

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• Funds to close are only required when the amount exceeds 1 month of the proposed PITI.

• A VOD must be accompanied by a minimum 30 day account statement reflecting start and end balance. Significant non-payroll deposits must be explained and documented.

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How to complete the 26-1802A(Brokered Loans)

VA Reference Guide can be found on the “Training Resource Page” under “Reference Guides”

Example for Brokered loans.

HUD Addendum for Brokered Loans

Be sure to complete this section.

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How to complete the 26-1802A(Correspondent Loans)

Example for Correspondent loans.

HUD Addendum for Correspondent Loans

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How to complete the 26-8923

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How to complete the 26-8923(contd)

For the purposes of calculating the maximum loan amount, the following must be used:

Line Number Description1

is limited to the calculation from the current lender’s payoff statement with interest accrual and fees, adjusted to the actual date of payoff, plus energy efficient improvements.

2is limited to direct cash from the Veteran to reduce the principal balance on the new base loan in Line 3. This line is not used to correct for any excess discount points that cannot be financed.

5is limited to no more than two discount points that can be financed. In cases where the borrower has elected to pay more than two discount points for the rate chosen, the excess would be included on the TRID-LE and TRID-CD, but not on the IRRRL Worksheet.

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will be calculated as follows: Line J minus the greater of either Line 5 or total discount points from the TRID-LE. Take this number and subtract Line 6 and Line 7. The lender must not finance loan costs greater than the 1 percent flat fee, should these costs exist in Line J.

11 must be the same percentage as Line 5; the amount may vary.

18 is established per the calculations of the form.

Any changes allowed under Regulation Z (12 C.F.R. 1026), that reflect an adjustment to Line J, will require the IRRRL Worksheet to be re-calculated. This may change the maximum allowable loan amount on Line 18, and may cause an additional change to the lender’s TRID-LE.

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Resources

VA Handbook: www.benefits.va.gov/warms/pam26_7.asp

Veteran Information Portal: https://vip.vba.va.gov/

• Registration• Order COE• Order Appraisal

VA Forms can be found at https://www.va.gov/vaforms/default.asp

FWL VA Reference Guide

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FWL VA Reference Guide

Questions?

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