VA Refinance Cash Out Updates Review March 13, 2019 Note, these - - PowerPoint PPT Presentation

▶
va refinance cash out updates review march 13 2019
SMART_READER_LITE
LIVE PREVIEW

VA Refinance Cash Out Updates Review March 13, 2019 Note, these - - PowerPoint PPT Presentation

Jan 07, 2023 315 likes •501 views

VA Refinance Cash Out Updates Review March 13, 2019 Note, these are informational webinars only and should be considered best practices for doing business with Note, these are informational webinars only and should be considered best practices

slide-1
SLIDE 1

866.453.2400 | www.CarringtonWholesale.com

VA Refinance Cash Out Updates Review March 13, 2019

1

Note, these are informational webinars only and should be considered best practices for doing business with CMS and should therefore not be relied upon for legal or compliance

  • advice. Please contact your CMS Account Executive with any questions.

All Rights Reser serve ved.

  • d. Carr

rrington gton Mort rtgage gage Holdi ldings, gs, LLC and its affiliat ates

Confidential & Proprietary Internal Use Only

Note, these are informational webinars only and should be considered best practices for doing business with CMS and should not be relied upon for legal or compliance advice. Please contact your CMS Account Executive with any questions.

slide-2
SLIDE 2

866.453.2400 | www.CarringtonWholesale.com

OPENING NOTES

Before We Get Started

To ask a question, please use your Questions Panel

Ask a Question in the GoTo Panel

Use the numbers on your panel

2

We will hold all questions until the end!

slide-3
SLIDE 3

866.453.2400 | www.CarringtonWholesale.com

Webinar HOSTS

Karen O’Brien Vice President, Credit Karen Weidenbach Director, Training and Development Mike Suchy Regional Sales Manager Patty Cochran

  • Sr. Account Executive

3

slide-4
SLIDE 4

866.453.2400 | www.CarringtonWholesale.com

OBJECTIVES

  • Review Recent Changes to VA Cash Out Rules
  • Break Down Net Tangible Benefit Updates
  • Review the New Required Comparison Certification Disclosure

4

slide-5
SLIDE 5

866.453.2400 | www.CarringtonWholesale.com

VA Announcement of Changes

5

Ensures Veterans have access to responsible credit options for refinancing and to provide Veterans with sufficient information on the impact of a refinance loan on their current and future financial position.

slide-6
SLIDE 6

866.453.2400 | www.CarringtonWholesale.com

What Has Changed?

  • Ref. Circular 26-18-30

Effective for all VA Cash-Out Loan Applications Taken On or After February 15, 2019

VA Announced New Policies to Guarantee Cash Out Refinance Loans

  • Clarified three specific categories of refinance loans
  • LTV can no longer exceed 100% for refinances
  • Net Tangible Benefit requirements are updated (Cash Out is no longer a NTB!)
  • New comparison certification must be provided no later than the 3rd business

day after the application date, and at closing

  • Loan Seasoning Required for all Refinance Loans (Ginnie Mae Criteria)
  • Fee Recoupment rules apply to for VA to VA Rate/Term Refinance

6

slide-7
SLIDE 7

866.453.2400 | www.CarringtonWholesale.com

Loan Categories Clarified

  • 1. VA IRRRL
  • Rate Reduction VA to VA Refi
  • Not impacted by these changes – future changes are possible
  • 2. Type I Cash Out Refinance
  • New Loan Amount (including VA FF) does NOT exceed payoff amount of current loan
  • Essentially Rate/Term Full Doc
  • Less than 1% of VA’s volume
  • Impacted by these changes
  • 3. Type II Cash-Out Refinance
  • New Loan Amount (including VA FF) DOES exceed payoff amount of current loan
  • Impacted by these changes

7

slide-8
SLIDE 8

866.453.2400 | www.CarringtonWholesale.com

TLTV Changes and Calculation

8

TLTV Can Not Exceed 100% of the Reasonable Value of the Property

This includes VA Funding Fee and any Financed Fees and Charges

  • Calculation: Divide the total loan amount (including VA FF, if applicable)

by the reasonable value on the Notice of Value of the property

Must be Less than or Equal to 100%!

slide-9
SLIDE 9

866.453.2400 | www.CarringtonWholesale.com

Seasoning Rules

CMS will Apply to All VA Refinance Loans

9

Changed – Loans Being Refinanced within 1 year from closing date:

  • 1 Year Payment History Required (if seasoned under 1 year)
  • New Lender must obtain a payment history/ledger from the

existing servicing lender documenting all payments

  • Credit Report Supplement acceptable if detailed payment history

Not Changed – All VA Refi Loans Minimum Seasoning:

  • A loan is considered seasoned on the later date of:
  • 210 days after the first monthly payment is made
  • Six monthly payments have been made on the loan

Ginnie Mae Requirement – CMS will Apply to all VA Loan Types

slide-10
SLIDE 10

866.453.2400 | www.CarringtonWholesale.com

Fee Recoupment Rule

Type pe I Ca I Cash sh Ou Out V t VA to V to VA Ref efi i Onl nly

10

All fees, expenses, & closing costs included in the loan amount and paid

  • utside of closing:
  • Must be recouped through lower principal and interest (P&I) payments
  • Within 36 months from the date of closing

The lender must certify to VA that the fee recoupment requirement is met

slide-11
SLIDE 11

866.453.2400 | www.CarringtonWholesale.com

Net Tangible Benefit Break Down

  • All cash-out refinancing loans must satisfy at least one of the following 8:
  • Eliminate monthly mortgage insurance
  • Decrease the loan term
  • Decrease monthly (P&I) payments
  • Reduce the interest rate
  • Refinance from an adjustable-rate loan to a fixed-rate loan
  • New TLTV equal to or less than 90% (New)
  • Refinance an interim construction loan (New)
  • Increase monthly residual income (New)*

Only Need 1 to qualify - but Must Include ALL that Apply of the 8 for VA (No More One and Done)

11

slide-12
SLIDE 12

866.453.2400 | www.CarringtonWholesale.com

*Increased Residual Income NTB Notes:

12

“Increased Monthly Residual Income” Means:

The Veteran is reducing consumer debt, resulting in improved residual income If the veteran is increasing their mortgage balance to pay off consumer debt, w we must show an improved residual income with the increased PITI

Example: Current PITI = $1000 Current Monthly Consumer Debt = $1500 New Loan PITI = $1200 New Monthly Consumer Debt = $1000 w/Pay Offs Difference PITI = $200 Reduced Monthly Consumer Debt = $500 Paying off other debt with monthly payments of $500 improved residual income by $300

Note!

slide-13
SLIDE 13

866.453.2400 | www.CarringtonWholesale.com

VA Cash-Out Comparison Certification (New Disclosure)

13

Must be Provided within 3 Biz Days of Loan Officer 1003 Signature AND at Closing

1. “Estimated” delivered with Initial Disclosures must be returned signed prior to FCI* 2. “Final” delivered with Closing Package must be signed at closing Both must show at least 1 Net Tangible Benefit to the Veteran!

Purpose: To clearly identify all possible NTBs, and compare to the existing loan!

The following information must be compared for the existing and new loan for all cash-out refis:

 New Loan amount vs. Payoff amount  Payment Amount  Loan type  Interest rate  Loan term  Total amount the Veteran will have paid after making all payments as scheduled  LTV  Home equity being removed from property

*FCI = Final Conditions In

slide-14
SLIDE 14

866.453.2400 | www.CarringtonWholesale.com

VA Cash-Out Comparison Certification

14

Compares Existing Loan to New Loan Defines All Possible Benefits “Estimate” must be in the file signed prior to Final Conditions In “Final” must be signed at closing “Estimate” Date within 3 Business Days of 1003 Application (LO Signature Date) “Final” or “Estimate” Indicated on Fillable PDF

slide-15
SLIDE 15

866.453.2400 | www.CarringtonWholesale.com

Certification Fillable PDF for CMS Partners Wholesale Brokers

15

Scroll!

slide-16
SLIDE 16

866.453.2400 | www.CarringtonWholesale.com

Certification Fillable PDF for CMS Partners Correspondent Sellers

16

slide-17
SLIDE 17

866.453.2400 | www.CarringtonWholesale.com

Questions!

Now is the Time…

To ask a question, please use your Questions Panel

Ask a Question in the GoTo Panel

Use the numbers on your panel

17

slide-18
SLIDE 18

866.453.2400 | www.CarringtonWholesale.com

THANK YOU

18