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New VA Cash Out Refinance Requirements

On December 19, 2018 VA published Circular 26-18-30 regarding an interim final rule addressing requirements for VA cash out refinances. This rule implements requirements of The Economic Growth, Regulatory Relief, and Consumer Protection Act which was enacted by congress.

 

Beginning with loan applications taken on or after February 15, 2019 lenders are required to provide the VA Cash Out Comparison Certification disclosure to the borrower within 3 business days of the application date and again at closing. The disclosure must be completed in good faith and signed by the borrowers. The regulation requires that the disclosure includes a comparison of the existing loan being refinanced, the new loan, disclosure of the Net Tangible Benefit of the new loan and a statement regarding the loss of equity due to the new refinance. The VA Cash Out Comparison Certification is available on JMAC’s website at https://help.jmaclending.com/hc/wholesale/resources. Broker’s will be responsible for completing this disclosure, and obtaining the borrower’s signatures within 3 business days of the application date.

 

All VA cash out refinances must now have a Net Tangible Benefit. There are 8 options for this benefit test: (The loan has to meet only one of the following 8 benefit tests - 8 options for meeting NTB requirements)

  1. The new loan eliminates monthly mortgage insurance, whether public or private, or monthly guaranty insurance;

  2. The term of the new loan is shorter than the remaining term of the loan being refinanced by at least 6 months;

  3. The interest rate on the new loan is lower than the interest rate on the loan being refinanced by at least 0.125% with no discount points;

  4. The P&I payment on the new loan is lower than the P&I payment on the loan being refinanced by at least 1% (i.e. current P&I payment $2500, new payment must be at least $25 [1%] lower);

  5. The new loan results in an increase in the borrower’s monthly residual income by at least 1% of the total qualifying income (i.e. monthly qualifying income $5000, residual must increase by $50 [1%]);

  6. The new loan refinances an interim loan to construct, alter, or repair the home;

  7. The new loan amount is equal to or less than 90 percent of the reasonable value of the home, or;

  8. The new loan refinances an adjustable rate loan to a fixed rate loan.

 

In addition to the net tangible benefit requirements, VA has also changed the LTV Calculation for cash out refinances. Effective with applications dated on or after February 15, 2019 the funding fee must be considered in the LTV. This would mean that the LTV will now be based off the TOTAL loan amount vs. BASE loan amount which has been used up to now. The total loan amount, including the funding fee may not exceed 100% LTV.

Clarification: Loans where the application was taken BEFORE 2/15/19 do not need to meet these requirements, however they may no longer receive an AUS approval (DU is being updated with new LTV calculations). If the AUS is run, and we receive a Refer – we must then manually underwrite the loan. This has major implications because many of our DU approved borrowers wouldn’t qualify under manual underwriting for many different reasons. We will work through these as they come, but the easiest solution would be to reduce the loan amount so the LTV (including FF) is 100% or less based on the new calculations, This should ensure the AUS approval is retained.

 

NEW Requirement: For loans being refinanced within 1 year from the date of closing, lenders must obtain a payment history/ledger from the servicing lender documenting all payments. If the loan is selected for audit by VA, the lender must include the payment ledger/history of the loan being refinanced in the loan file for VA review.

AMC Update - DVS acquired by ProTeck

Beginning Feb. 11, the Mercury appraisal Portal will display the AMC name as "ProTeck/DVS" instead of "DVS".

Neither appraisal fees nor turn times will be changing at this time. All existing appraisal orders with DVS will be unaffected by this change. 

Below we have include more information about ProTeck:

Appraisal Company Name

Pro Teck Valuation Services

Brief Info

Pro Teck Valuation Services is a national provider of Appraisal Management and residential real estate valuation services. For more than forty years, Pro Teck has worked with lenders, loan servicers and investors to improve risk management through superior    real estate collateral information. With a sharp focus on speed, accuracy and customer service, Pro Teck delivers a comprehensive suite of valuation products including appraisals, desktop appraisals, BPOs, desktop reviews, AVMs, data/analytics and hybrid solutions.

Location

307 Waverley Oaks Rd Suite 305 Waltham, MA  02452

Hours of Operation

M-F 7am EST to 6pm PST and Saturday 8am EST – 5pm EST

Contact Number

Main Line: 781-314-1680 X: 774, Morgan Ardito Contact: 916-805-5357

Company Website

https://www.proteckservices.com/

Appraisal States

Full national coverage

Turn Time

5-7 business days

QUICK PRICER - DOC TYPES FOR PRICING NON-QM LOANS

To assist with pricing Non-QM loans, Doc Types within the Quick Pricer and Full Pricer have been updated to align with the most current programs being offered.

Updated Doc Types include the following:

  • Full Document

  • 12-Month Personal Bank Statements

  • 24-Month Personal Bank Statements

  • 12-Month Business Bank Statements

  • 24-Month Business Bank Statements

  • Other Bank Statements

  • 1 Year Tax Returns

  • VOE

  • Asset Utilization

  • Debt Service Coverage (DSCR)

  • No Income

See it for yourself. Try it out on the Broker Portal.

Government Shutdown

Due to partial government shutdown, the following will be impacted:

VVOE Affected for Borrowers who worked for the Government.

Government and Non-Conforming are required regardless before docs.

Conforming can be completed post-closing, will hold broker’s check until VVOE is completed.

4506T / SSA Validation (REQUIRED PRIOR TO CLOSING):

Conforming, Government and Non-Conforming (Borrower can obtain transcripts from IRS website)

USDA:

No new conditional commitment issuance by USDA

Introducing the JMAC Help Center

All JMAC resources are now found under our new Help Center.

JMAC is excited to introduce our all-new Help Center for Brokers and Correspondents. Here you will find all of JMAC's forms, instructions, resources and documents in one comprehensive site.

  • Search Engine to find forms and resources

  • Support for Wholesale & Correspondent

  • Information & Guides

  • Search for whatever you need

Have a look: JMAC Help Center

Lock Desk Closure on Wednesday Dec. 5

U.S. financial markets will be closed today Wednesday, Dec. 5, 2018, for a national day of mourning to honor former President George H.W. Bush. Due to the bond market closure, JMAC Lending’s Lock Desk will be closed for locking today. The Lock Desk will reopen at 8:00 A.M. P.S.T. tomorrow Thursday, Dec. 6. 

JMAC Lending will be open for all other business from 8:00 a.m. until 5:00 p.m.

Questions relating to locks should be sent to LockDesk@JMACLending.com.

California Wildfires (DR-4407)

On December 3rd, 2018 the Federal Emergency Management Agency (FEMA) issued an end date of November 25th, 2018 for the California Wildfires Major Disaster Declaration (DR-4407).

Requirements for Properties in Disaster Areas

Conforming loans with an appraisal
If the appraisal is dated on or before Disaster End Date Then a disaster area inspection report (CDAIR) is required or a 1004D
If the appraisal is dated after Disaster Incident End Date Then appraisal must address the recent natural disaster
VA with Appraisal
If the appraisal is dated on or before Disaster End Date Then a disaster area inspection report (CDAIR) is required or a 1004D
If the appraisal is dated after Disaster Incident End Date Then appraisal must address the recent natural disaster
FHA loans with Appraisal
If the appraisal is dated on or before Disaster End/HUD Waiver Date Then a disaster area inspection report (CDAIR) is required or a 1004D by the original FHA appraiser with interior/exterior photos is required (However, if the original Appraiser is not available, another FHA Roster Appraiser in good standing with geographic competence in the affected market may be used). HUD will not allow any re-inspections to be completed until after FEMA/HUD declares an Incident End Date.
If the appraisal is dated after Disaster Incident End/HUD Waiver Date Then appraisal must address the recent natural disaster
Jumbo/Non-Conforming with Appraisal
If the appraisal is dated on or before Disaster End/HUD Waiver Date Then a disaster area inspection report (CDAIR) including interior and exterior photos is required or a 1004D
If the appraisal is dated after Disaster Incident End Date Then appraisal must address the recent natural disaster
Conforming loans without an Appraisal
If Conforming Loan with Property Inspection Waiver (PIW) Then a full appraisal is required
FHA Streamlines and VA IRRRLS
FHA Streamlines and VA IRRRL require CDAIR or a 1004D with interior/exterior photos

Note: In the event that significant damage is shown on the 1004D or CDAIR, additional conditions may be required.

Conventional Loan Limits for 2019

Big news! The Federal Housing Finance Agency (FHFA) announced Nov. 27 that it is increasing the conforming loan limit for Fannie and Freddie mortgages in nearly every part of the U.S.

According the FHFA, conforming loan limits will rise from this year’s total of $453,100 to $484,350 for 2019. That’s an increase of 6.9% from this year’s loan limit to next year’s.

This marks the third straight year that the FHFA has increased the conforming loan limits. 

Effective Dec. 1, 2018, JMAC will now accept the new 2019 Loan Limits on the following products:

  • FHLMC Home One

  • FHLMC Home Possible

  • FHLMC Standard

  • FNMA Home Ready

  • FNMA Standard

For all Fixed-Rate products, loans will require a new DU/LPA ran on or after 12/10/18, and the earliest the loan can close is 12/17/2018.

For all ARM Products, loans will require a new DU/LPA ran on or after 12/10/18, and the earliest the loan can close is 1/2/2019.

Please note that for all FHLMC Products, loan amounts over $1,000,000 will not be eligible until 12/19/2018 when LPA is updated to allow loan amounts above $1,000,000.

Units Continental US Hawaii Units Continental US Hawaii
Conforming Maximum Loan Amount 2019 High Balance Maximum Loan Amount 2019
One $484,650 $726,525 One $726,525 $726,525
Two $620,200 $930,300 Two $930,300 $930,300
Three $749,650 $1,124,475 Three $1,124,475 $1,124,475
Four $931,600 $1,397,400 Four $1,397,400 $1,397,400