18-24: VA Circular 26-18-13 Updates to VA Refinance Transactions

Recoupment Statements

Required with initial and final disclosures

No change.  Required with initial and final disclosures.

Months to Recoup

Not required

• Maximum 36 months recoupment
• Calculation based on Circular 26-18-1
• Lender must certify the loan meets requirements

Net Tangible Benefit (NTB): Interest Rate Reduction

Interest rate must be reduced

• Fixed to Fixed requires 0.5% rate reduction
• Fixed to ARM requires 2.0% rate reduction
• ARM to Fixed not applicable
• ARM to ARM not applicable
• Discount points may be used to lower interest rate, subject to additional restrictions summarized below.
• To ensure compliance with VA’s requirements, a copy of the note from the refinanced loan must be provided.

Discount Points

Not required

When discount points are used to reduce the interest rate, an LTV calculation is required based on the following:

• less than or equal to one discount point requires an LTV* of 100% or less
• greater than one discount point requires an LTV* of 90% or less

VA Specific Loan Seasoning

No VA specific seasoning,  Ginnie Mae requirements applicable

The note date for the new loan must be the later of:

• The date that is 210 days after the date on which the first payment is made on the loan, and;
• The date on which the sixth monthly payment is made on the loan