VA Lenders Handbook (VA Pamphlet 26-7), Chapter 5, Topic 4 — Automatically Closed Loan Procedures

VA Pamphlet 26-7, Chapter 5 (How to Process VA Loans and Submit them to VA), Topic 4 — Automatically Closed Loan Procedures

Effective 2024-05-14 · publisher's stamp for this provision

Topic 4. Automatically Closed Loan Procedures Change Date: May 14, 2024 This topic has been edited to make minor grammatical changes. Section a, How to Request Guaranty, has been updated with additional information related to the late reporting certification required if the loan is not reported in a timely manner. Section b, Documents Required if the Lender is Unable to Obtain an Electronic LGC, has been updated to remove the stacking order for manual guaranty requests and to direct the lender to the updated stacking order in Appendix B, Topic 1. Section c, FFLR Procedures, has been updated to remove the stacking orders for VA FFLR requests and to direct the lender to the updated stacking orders in Appendix B. a. How to Request Guaranty The LGC is the lender's evidence that VA has guaranteed the loan. See Chapter 3 of this handbook for an explanation of what evidence of guaranty means to the lender. Loans must be reported to VA within 60 calendar days of closing1 except construction and alteration/repair loans which must be reported within 60 calendar days of completion of the construction or improvements in accordance with the plans and specifications as evidenced by the post construction inspection report. A lender that fails to report the loan in a timely manner must provide a written explanation signed by an officer of the company that includes the following: The reason for the delay in reporting the loan for guaranty, and Certification that the loan is not 30 or more days past due, and Certification that the loan otherwise conforms with standards established under chapter 37 of Title 38 U.S.C. and 38 C.F.R. part 36. Note: failure to report a loan for guaranty in a timely manner may result in the automatic selection of the loan for VA FFLR. Lenders must use WebLGY to obtain electronic LGCs for loans closed on the automatic basis. Exceptions to an automatically issued LGC in WebLGY include, but are not limited to: Loans that were underwritten as a prior approval and VA issued a certificate of commitment in WebLGY, and Veteran/Veteran joint loans where two or more Veterans are splitting entitlement. b. Documents Required if the Lender is Unable to Obtain an Electronic LGC If a lender is unable to obtain an electronic LGC, the lender may request VA’s assistance by uploading a manual guaranty package to the loan record in WebLGY. The stacking order for manual guaranty requests is provided in Appendix B, Topic 1. The file should be uploaded as a single-file PDF into VA’s electronic loan system (WebLGY or subsequent system) to the correspondence section of the loan record as a ‘Prior Approval Loan Package’. If the file size exceeds VA’s limit, it is permissible to split the file, but it should still follow the stacking order. VA will then issue the LGC or notify the lender of additional information needed for LGC issuance. c. FFLR Procedures VA requires lenders to maintain loan origination records and make them available to VA for oversight and audit purposes2. Lenders will be notified, either immediately by WebLGY or in writing by VA offices, when a loan has been selected for FFLR. Lenders must upload the complete loan file in the proper stacking order to WebLGY within 15-calendar days of receiving notification from VA. The loan origination file should be uploaded as a single-file PDF into VA’s electronic loan system (WebLGY or subsequent system). If the file size exceeds VA’s limit, it is permissible to split the file, but it should still follow the stacking order. The Uniform Loan Application Dataset (ULAD) and Uniform Closing Dataset (UCD) are to be uploaded as separate files, in ".xml" format only. The stacking order for FFLR of Purchase and Cash-Out Refinances is provided in Appendix B, Topic 3. The stacking order for FFLR of IRRRLs is provided in Appendix B, Topic 4. If VA finds significant deficiencies in a loan submission, the lender will be notified. Lenders must upload a response to WebLGY within 30-calendar days of receipt of any deficiency letter requesting clarification or additional documentation. Failure to respond to VA’s requests for additional documentation can lead to non-compliance with VA guidelines which can affect a lender’s ability to maintain automatic authority. 138 C.F.R. § 36.4303(a) 238 CFR § 36.4333

Source: VA Pamphlet 26-7, Chapter 5 (How to Process VA Loans and Submit them to VA), Topic 4 — Automatically Closed Loan Procedures · source URL · snapshot 5593fdab253e238c