VA Lender Handbook M26-7 Chapter 7 — Loans Requiring Special Underwriting, Guaranty, and Other Considerations

va-m26-7-ch07

VA Pamphlet 26-7 Chapter 7 governs special-underwriting VA loans.

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source:
  type: regulation
  id: va-m26-7-ch07
  authority: VA Lender Handbook M26-7 Chapter 7 — Loans Requiring Special Underwriting, Guaranty, and Other Considerations
  description: |
    VA Pamphlet 26-7 Chapter 7 governs special-underwriting VA loans.
obligations:
  - id: va-m26-7-ch07-construction-draw-borrower-approval
    canonical_id: va-m26-7-ch07-construction-draw-borrower-approval
    section: VA M26-7 Ch. 7 — Construction Loan Draw Approvals
    description: |
      On a VA-guaranteed construction loan, [UNDERWRITER] must obtain
      written approval from the borrower before each draw payment is
      provided to the builder. The loan will not be guaranteed until
      construction is complete and all Notice of Value (NOV) conditions
      are met.
    type: do
    audit_question: For every VA-guaranteed construction loan, can [UNDERWRITER] evidence (i) written borrower approval in file before each draw payment to the builder and (ii) completion of construction with all NOV conditions met before VA guaranty is requested?
    program_review: Does the program ensure written borrower approval precedes each construction-loan draw to the builder, and that guaranty is requested only after construction completion with all NOV conditions met?
    file_review: Spot-check construction loans; confirm written borrower approval for each draw and completion/NOV-condition evidence before guaranty request.
    judgment: false
    feeds: []
    workflow_phase: closing
    owner_role: underwriter
    secondary_owner_role: closer
    cadence: per_event
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - va
      - m26-7
      - ch07
      - construction-loan
      - draws
      - promoted
    primary_source:
      tier: 1
      authority: VA Lender Handbook M26-7 Chapter 7 — Loans Requiring Special Underwriting, Guaranty, and Other Considerations
      source_class: va-handbook-m26-7
      source_url: https://benefits.va.gov/WARMS/M26_7.asp
      snapshot_id: 0e2735cf8ca44400
      fetched_at: '2026-05-23T01:50:00Z'
      content_hash: sha256:74297ad4fadd5e592b5688f5567170f8c128f7c9749dd06edd59e735a69099d8
      paragraph_quote: 'The lender must obtain written approval from the borrower before each draw '
      drafter_attestation: Copied verbatim from VA Handbook snapshot 0e2735cf8ca44400 (M26-7 Ch. 7 — Construction draws) at 2026-05-23. Source PDF retrieved via Wayback Machine.
    promoted_at: '2026-05-23T02:05:45+00:00'
    promoted_from: va-m26-7-ch07-roundb-v1.yaml
  - id: va-m26-7-ch07-limited-guaranty-marketability
    canonical_id: va-m26-7-ch07-limited-guaranty-marketability
    section: VA M26-7 Ch. 7 — Joint/Limited-Guaranty Marketability Check
    description: |
      For VA loans with a limited (less-than-standard) guaranty (e.g.,
      joint loans with non-Veteran borrowers), [UNDERWRITER] must satisfy
      itself that the requirements of its investor or the secondary market
      can be met with this limited guaranty.
    type: do
    audit_question: For every VA loan with a limited guaranty (joint loan with a non-Veteran borrower, etc.), can [UNDERWRITER] evidence its determination that the investor or secondary-market requirements can be met with the limited guaranty?
    program_review: Does the program ensure that, on limited-guaranty loans (e.g., joint loans with non-Veteran borrowers), the underwriter determines investor/secondary-market requirements can be met with the limited guaranty?
    file_review: Spot-check limited-guaranty files; confirm the documented investor/secondary-market satisfiability determination. The officer judges whether that determination is adequately supported.
    judgment: true
    feeds: []
    workflow_phase: origination
    owner_role: underwriter
    secondary_owner_role: loan_officer
    cadence: per_loan
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - va
      - m26-7
      - ch07
      - joint-loan
      - limited-guaranty
      - promoted
    primary_source:
      tier: 1
      authority: VA Lender Handbook M26-7 Chapter 7 — Loans Requiring Special Underwriting, Guaranty, and Other Considerations
      source_class: va-handbook-m26-7
      source_url: https://benefits.va.gov/WARMS/M26_7.asp
      snapshot_id: 0e2735cf8ca44400
      fetched_at: '2026-05-23T01:50:00Z'
      content_hash: sha256:74297ad4fadd5e592b5688f5567170f8c128f7c9749dd06edd59e735a69099d8
      paragraph_quote: 'The lender must satisfy itself that the requirements of its investor or the '
      drafter_attestation: Copied verbatim from VA Handbook snapshot 0e2735cf8ca44400 (M26-7 Ch. 7 — Limited guaranty marketability) at 2026-05-23. Source PDF retrieved via Wayback Machine.
    promoted_at: '2026-05-23T02:05:45+00:00'
    promoted_from: va-m26-7-ch07-roundb-v1.yaml
  - id: va-m26-7-ch07-buydown-written-explanation
    canonical_id: va-m26-7-ch07-buydown-written-explanation
    section: VA M26-7 Ch. 7 — Temporary Buydown Borrower Disclosure
    description: |
      [UNDERWRITER] must provide the Veteran-borrower with a clear, written
      explanation of any temporary-buydown agreement, and a copy of the
      buydown and escrow agreements must accompany the loan submission to
      VA.
    type: do
    audit_question: For every VA loan with a temporary buydown, can [UNDERWRITER] evidence (i) a clear written explanation of the buydown agreement provided to the Veteran-borrower and (ii) inclusion of the buydown and escrow agreements with the loan submission to VA?
    program_review: Does the program ensure a clear written explanation of any temporary-buydown agreement is provided to the Veteran-borrower, and that the buydown and escrow agreements accompany the VA loan submission?
    file_review: Spot-check buydown files; confirm the written borrower explanation and the buydown/escrow agreements in the VA submission.
    judgment: false
    feeds: []
    workflow_phase: origination
    owner_role: underwriter
    secondary_owner_role: closer
    cadence: per_loan
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - va
      - m26-7
      - ch07
      - buydown
      - disclosure
      - promoted
    primary_source:
      tier: 1
      authority: VA Lender Handbook M26-7 Chapter 7 — Loans Requiring Special Underwriting, Guaranty, and Other Considerations
      source_class: va-handbook-m26-7
      source_url: https://benefits.va.gov/WARMS/M26_7.asp
      snapshot_id: 0e2735cf8ca44400
      fetched_at: '2026-05-23T01:50:00Z'
      content_hash: sha256:74297ad4fadd5e592b5688f5567170f8c128f7c9749dd06edd59e735a69099d8
      paragraph_quote: 'the buydown. Lenders must provide the Veteran-borrower with a clear, '
      drafter_attestation: Copied verbatim from VA Handbook snapshot 0e2735cf8ca44400 (M26-7 Ch. 7 — Buydown disclosure) at 2026-05-23. Source PDF retrieved via Wayback Machine.
    promoted_at: '2026-05-23T02:05:45+00:00'
    promoted_from: va-m26-7-ch07-roundb-v1.yaml
_promotion_history:
  - promoted_at: '2026-05-23T02:05:45+00:00'
    candidate_path: obligations\_remediation\_round_b_drafts\va-m26-7-ch07-roundb-v1.yaml
    candidates_promoted: 3
    candidates_skipped_existing: 0

Verbatim regulatory text (3)

Verbatim provisions from VA Lender Handbook M26-7 Chapter 7 — Loans Requiring Special Underwriting, Guaranty, and Other Considerations — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.

VA M26-7 Ch. 7 — Construction Loan Draw Approvals

The lender must obtain written approval from the borrower before each draw

Source: VA Lender Handbook M26-7 Chapter 7 — Loans Requiring Special Underwriting, Guaranty, and Other Considerations · source URL · snapshot 0e2735cf8ca44400

VA M26-7 Ch. 7 — Joint/Limited-Guaranty Marketability Check

The lender must satisfy itself that the requirements of its investor or the

Source: VA Lender Handbook M26-7 Chapter 7 — Loans Requiring Special Underwriting, Guaranty, and Other Considerations · source URL · snapshot 0e2735cf8ca44400

VA M26-7 Ch. 7 — Temporary Buydown Borrower Disclosure

the buydown. Lenders must provide the Veteran-borrower with a clear,

Source: VA Lender Handbook M26-7 Chapter 7 — Loans Requiring Special Underwriting, Guaranty, and Other Considerations · source URL · snapshot 0e2735cf8ca44400