Written By: Bonnie Wilt-Hild, Op-Ed Writer
The past couple of years have been all about FHA. It seems as though every broker and lender that had not offered the program in the past were becoming approved and every conventional underwriter was working on getting their DE. It now seems that FHA sister program, that being the VA Home Loan Guaranty program is also on the rise. Many lenders and brokers have submitted applications to VA for approval in recent months so I thought now might be a good time to let everyone know about the things that are specific to VA that every originator, processor and underwriter need to know.
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First I want to talk about the appraisal piece as well as case number assignment and the TAS system. It is important to know that VA provides for a random selection of appraiser at time of case number order so it’s important that processors are aware that in order to have an appraiser assigned to your case, you must complete case number assignment in the TAS system in the VA portal.
Once your case number is assigned, so to will be the name and contact information of your appraiser. This is the point at which you can go ahead and order the appraisal. Also remember that you will need to go back into TAS to pull the appraisal once it is completed and if you are a new lender, you must have your LAPP approval and your underwriter must complete his or her five appraisal test cases before you can complete the NOV without VA oversight. If you have not applied for LAPP approval then you will need to have the Certificate of Reasonable Value issued by VA.
Next, don’t forget the VA specific stuff like child care expenses and your maintenance and utility charges. VA requires that any borrower demonstrating dependents under the age of 10 on the 1003 where those borrowers are both employed outside of the home, provide information as to the child care expenses, if any, for the younger dependent children. This means a letter from the borrower indicating if there are any expenses incurred and if so the amount of such expenses. Remember to verify this information from the daycare provider and include it in the borrowers DTI.
Loan officers really need to pay attention to this from a prequalification standpoint because if the day care expenses are significant, it could kill your deal. Also do not forget to calculate your maintenance and utility charges for the property because this also plays a part in your residual income calculations. A maintenance and utility charge apply to all VA guaranteed mortgage transactions and is calculated at .14 cents a square foot. So basically multiply the square footage of the property by .14 cents and include this number on the final Loan Analysis under estimated monthly housing expense.
Finally, don’t forget your residual income calculations. VA requires that a borrowers residual income be calculated to determine if the monthly income left over each month after considering the borrowers monthly debt including taxes, social security, estimated monthly shelter expenses and debts and obligations meets VA residual income guidelines. These guidelines can be found on VA’s website in the VA handbook and vary depending on the number of family members, geographic location of the property as well as the loan amount. Make sure that the borrower’s residual income is never less than the required VA guideline because if it is the case will more than likely get rejected.
Need FHA Training? CLICK HERE: http://www.FHA-Classes.org
As far as processing is concerned documentation standards are similar to any full documentation loan products so collect the pay stubs, W-2’s, bank statements and so on. Remember also that the VA Funding Fee varies depending on your down payment and transaction type so pull the VAFF schedule and keep it handy for use. As always, happy underwriting.
About The Author
Bonnie Wilt-Hild - As an op-ed writer, Bonnie has held many mortgage underwriting positions, including Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans".
