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Presenting VA Interest Rate Reduction Refinancing Loans (IRRRLs)

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Presentation on theme: "Presenting VA Interest Rate Reduction Refinancing Loans (IRRRLs)"— Presentation transcript:

1 Presenting VA Interest Rate Reduction Refinancing Loans (IRRRLs)
Fran Wagner National Trainer 5151 Corporate Drive Troy, MI 1 (800) Wholesale.Flagstar.Com

2 Today’s Agenda Definition and Purpose Borrower Eligibility
Case Number Assignment Funding Fee Calculating the Loan Amount Underwriting Requirements Power of Attorney Old vs. New Loan Statement Documentation and Disclosures

3 Definition and Purpose
Refinance of an existing VA loan into another VA loan that Lowers the Interest Rate If loan being refinanced is an ARM loan, interest rate reduction requirement is waived AND Reduces the Principal and Interest Payment If loan being refinanced is an ARM or new loan shortens the loan term, principal and interest payment reduction requirement is waived Credit qualification is required when payment increases 20% or more

4 Eligible Borrowers Original veteran alone, even if loan being refinanced was joint with previous spouse or other non-veterans – Veteran must be obligated on the existing loan and must still be owner of record – If veteran is still married to spouse who was co-borrower, the spouse must remain on the loan Original veteran and different spouse Original veteran and new spouse Surviving spouse – Must be obligated on the loan being refinanced New veteran with sufficient entitlement – New veteran’s entitlement substitutes for the existing veteran’s entitlement, which is restored

5 Ineligible Borrowers Veteran holding a conventional loan
Veteran without spouse if the spouse was a co-borrower on the loan being refinanced Veteran’s previous spouse when divorced and previous spouse now owns home as a result of the divorce settlement Veteran’s widow or widower who is not a borrower on loan being refinanced Non-veteran

6 Prior Loan Validation In lieu of Certificate of Eligibility, obtain Prior Loan Validation through WebLGY Web site - Select “WebLGY” Log-in Select “Eligibility” link Select “Prior Loan Validation” Enter veteran’s Social Security Number and last name System should produce veteran’s active loan information – Print screen for loan being refinanced and use as certificate of eligibility

7 Prior Loan Validation, Cont’d
Provides the following information VA case number – Make certain that prior loan validation is for the loan being refinanced and not other VA loans Guaranty date Guaranty amount Guaranty percentage Status (Must be “guaranty issued”) Loan amount

8 Case Number Assignment
Obtain a new VA case number through The Appraisal System (TAS) Do not order an appraisal If you do not have a log-in, complete Flagstar Form #9701 – VA Case Number/Appraiser Assignment and fax to Government Lending Department – Indicate that loan is an IRRRL and no appraisal is required or requested

9 Entitlement Entitlement charged for the IRRRL will be the same amount charged for the loan being refinanced, regardless of new loan amount: If the entitlement charged to the loan being refinanced was $50,000, the new entitlement is $50,000

10 Funding Fee .50% Veterans exempt for any of the following reasons do not pay the funding fee: Veteran received disability benefits in the past Veteran is eligible to receive disability benefits but receives retirement pay instead Veteran currently receives disability benefits Borrower is the surviving spouse of a veteran who died while on active duty or from a service-connected disability VA Form – Verification of VA Benefits required Send fully-executed form to VA Regional Loan Center that has jurisdiction over the state in which the property is located

11 Maximum Loan Calculation
Non-Flagstar to Flagstar IRRRL loans for manufactured homes are not permitted: Complete Interest Rate Reduction Refinancing Loan Worksheet and include in file – The completed form must mirror the way the loan is closed Link to worksheet is contained in Flagstar Document #9005 VA Form – Interactive pdf format - Prints from Loan Origination Systems (Calyx, etc.)

12 Maximum Loan Calculation, Cont’d
Maximum Mortgage may include all of the following: Existing VA loan balance, including late charges – If late payments are included in the loan amount, VA must underwrite the file and borrower must be credit qualified Allowable fees and charges, including up to two discount points Brokers may charge discount points required to buy down the rate Correspondents may charge discount points that are reasonable and customary, regardless of loan pricing Only two points may be financed into the IRRRL loan – Discount points above the 2% limit must be paid in cash by the veteran Funding Fee 2009 loan limits may be exceeded as long as IRRRL Worksheet calculation is not exceeded

Borrowers may pay the following closing costs, provided they are reasonable and customary 1% origination fee Reasonable discount points – Up to two points may be included in the new loan amount – Discount points above 2% must be paid in cash Recording fees Pre-paid items (taxes, assessments, etc.)

Insurances (hazard and flood, when required) Flood zone determination Survey, if required by lender or veteran, except for surveys of condominiums Title insurance and title examination and applicable environmental protection lien endorsements Mailing fees for refinances - Only when the saved per diem interest cost to the veteran will exceed the cost of the special handling VA funding fee Mortgage Electronic Registration System (MERS) fee

Borrowers may not pay the following fees and closing costs: Attorney fees other than for title commitments Broker fees Loan closing or settlement fees Doc prep, loan application or processing fees Interest rate lock-in fees Postage, stationery, telephone or other overhead charges

Amortization schedules, etc. Notary fees Escrow fees or charges Commitment fees or marketing fees of secondary purchasers Trustee fees Fees charged by third parties, regardless of affiliation with lender Tax service fees – Flagstar charges a $69 tax service fee If no origination fee is charged, the veteran may pay non-allowable costs up to 1% of the loan amount

17 Product Highlights Do not run loan through automated underwriting
The following items are not required: Credit report Verification of mortgage Verification of employment Verification of assets Appraisal Termite inspection Maximum cash-in-hand $500 Must be the result of documented overages

18 Product Highlights, Cont’d
New loan term may not exceed original loan term plus ten years 30 year maximum loan term Existing subordinate financing may be re-subordinated Borrower must be current on existing mortgage – If the loan funds in April, the March payment must have been made

19 Power of Attorney Permitted for active-duty military personnel stationed overseas or other veterans who cannot be present at closing: General power of attorney Veteran must sign initial 1003 Specific power of attorney Veteran not required to sign any application documents Power of attorney document must include all of the following specifications: Entitlement – must state the veteran intends to re-use a specified amount of entitlement Loan purpose – must state veteran intends to obtain IRRRL financing Property – must list address and legal description Loan terms – must state loan type and terms Occupancy – veteran must state he or she intends to meet VA occupancy requirement

20 Power of Attorney, Cont’d
All signatures must be notarized, and the power of attorney must be reviewed by a Flagstar underwriter All signatures must match signatures on application documents, if applicable There must be more than one borrower on the loan, and at least one borrower must be present at closing Single borrower transactions permitted when Flagstar has experience with borrower and can compare signatures from a previous file Title policy cannot contain any exceptions related to the POA

21 Alive and Well Statement
Lender must verify veteran is alive and well and not missing in action on the day of closing , fax or letter from veteran , fax or letter from veteran’s commanding officer In extreme cases, provide lender certification stating conversation with commanding officer or rear detachment personnel Name and rank/title Date and time of conversation Method of communication, including phone number, if applicable

22 Old Versus New Loan Comparison
Flagstar document #9723 – Not required when payment is not decreasing (refinance of an ARM loan or shortening of loan term) Compares loan being refinanced to the new loan Loan amount Interest Rate Term Monthly Principal and Interest Monthly PITI States how long it will take the borrower to recoup all closing costs, regardless of whether they are financed into the loan amount Determine the payment difference and divide the amount of closing costs, including the funding fee and discount points by the monthly savings Payment on loan being refinanced - $1000 New payment - $900 Closing costs, discount points, funding fee, and pre-paid expenses for new loan - $5000 $5000 divided by $100 monthly savings = 50 months to recoup costs

23 Required File Documentation
1003 Must be new 1003 – Not a copy of 1003 from original loan IRRRL Worksheet – VA Form VA Old vs. New Statement – Flagstar document #9723 VA Form 1802-A (or FHA A) – Pages 1 and 2 only VA disability questionnaire – Flagstar document #9706 VA Letter of Indebtedness – VA Form Required only if borrower is exempt from funding fee Military Counseling Checklist – VA Form Required for active-duty borrowers only Federal Collection Policy – VA Form

24 Required File Documentation
VA Case Number Assignment Eligibility verification via ONE of the following methods: Certified true copy of original certificate of eligibility Prior loan validation from WebLGY – must indicate same loan number as loan being refinanced CAIVR Verification GFE TIL Servicing Disclosure Privacy Disclosures – Flagstar Document #4804

25 Required File Documentation
Patriot Act Disclosure – Flagstar document #3243 Driver’s License Interest Rate/Point Disclosure Statement – Flagstar document #9704 ARM Disclosure, if applicable Payoff verifying loan is current Copy of original note Power of attorney, if applicable Alive and well and not missing in action verification if using POA Input “999” in Loantrac credit score field

26 Documents Required at Closing
Social Security Verification – Flagstar document #3257 Fully executed Request for Certificate of Eligibility – VA Form Report and Certification of Loan Disbursement – VA Form

27 VA Regional Loan Centers

28 Regional Loan Centers Cleveland Regional Loan Center
Delaware, Indiana, Michigan, New Jersey, Ohio, Pennsylvania 1240 East Ninth Street Cleveland, Ohio (800) Houston Regional Loan Center Arkansas, Louisiana, Oklahoma, Texas 6900 Almeda Road Houston, TX (888)

29 Regional Loan Centers St. Paul Regional Loan Center
Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota Wisconsin 1 Federal Building Fort Snelling St. Paul, MN (800) Atlanta Regional Loan Center Georgia, North Carolina, South Carolina, Tennessee 1700 Clairmont Road Decatur, GA (888)

30 Regional Loan Centers Denver Regional Loan Center
Alaska, Colorado, Idaho, Montana, Oregon, Utah, Washington, Wyoming 155 Van Gordon Street Lakewood, CO (888) Manchester Regional Loan Center Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, Vermont 275 Chestnut Street Manchester, NH (800)

31 Regional Loan Centers Phoenix Regional Loan Center
Arizona, California, Nevada, New Mexico 3333 North Central Avenue Phoenix, AZ (888) Roanoke Regional Loan Center District of Columbia, Kentucky, Maryland, Virginia, West Virginia 210 Franklin Road, SW Roanoke, VA (800)

32 Regional Loan Centers St. Petersburg Regional Loan Center
Alabama, Florida, Mississippi, Puerto Rico, U.S. Virgin Islands 9500 Bay Pines Boulevard St. Petersburg, FL (888) Honolulu Regional Office Hawaii 459 Patterson Road Honolulu, HI (808)

33 Government Underwriting Support/Contact Numbers
Questions pertaining to files in process: Underwriter General government loan questions: Government Underwriting Support Desk – Select one for underwriting and then 2 for Government Underwriting

THANK YOU FOR GIVING FLAGSTAR BANK THIS OPPORTUNITY. WE APPRECIATE YOUR BUSINESS AND LOYALTY! Contact Information Fran Wagner National Trainer Direct Number: Toll Free: , Ext. 5801

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