VA Streamline Refinance: Removing Somone From The Loan

August 16, 2009

When you participate in the VA streamline / VA IRRRL program, can you remove one of the borrowers from the loan?

This question has been popular with lenders and so we figured we would put more information out about it.

Not unless you plan on fully qualifying for a new VA loan with the remaining person on the loan.

Many times when people get divorced, one spouse gets the house and they continue making the mortgage payment. When it comes time to refinance, in the VA streamline refinance program, both people on the loan still must sign and agree to the refinance – otherwise, it can’t be done as a VA streamline – it will have to be a VA full documentation loan (or perhaps a different type of full-documentation loan).

The VA streamline won’t allow you to remove borrowers, but you can add borrowers in the process. So for example, if you originally bought the house as a single person but have since been married and want to add your new spouse to the loan and title – you can do that with the VA streamline refinance program.

So you can add more borrowers, but you can’t subtract borrowers with the VA streamline refinance. VA is happy to have more people responsible for the loan, but not so happy to have less people responsible for the loan.

VA Streamline Refinance Now Requires 620 Credit Score

July 12, 2009

VA Streamline Refinance: 620 Credit Score Now Required By Virtually All Lenders

For some time, there has not been a minimum credit score requirement for VA streamline refinance loans. This week, it was announced by the last major lender that now they are requiring a minimum of a 620 credit score on all VA streamline refinance loans. TB&W made the announcement that they were moving their minimum credit score requirement for all FHA streamline mortgage refinance and all VA streamline refinance loans to 620.

Details Of The Announcement

FHA Streamlines (credit and non-credit qualifying) and VA IRRRL’s with Credit Scores below 620 must be LOCKED prior to July 13, 2009 AND must CLOSE (Note Date) no later than September 15, 2009, and must be delivered to TBW within 10 days after closing Loans in this category locked on and after July 13, 2009 will require a minimum FICO of 620.

Clients will be required to obtain a 3 Repository credit report and utilize the standard method of determining qualifying FICO. Any Conventional, FHA (including Streamline Refinance), or VA (including IRRRL) loan that exceeds $417,000 with a Credit Scores below 660 must be LOCKED prior to July 13, 2009 AND must CLOSE (Note Date) no later than September 15, 2009, and must be delivered to TBW within 10 days after closing Loans in this category locked on and after July 13, 2009 will require a minimum FICO of 660.

Clients will be required to obtain a 3 Repository credit report and utilize the standard method of determining qualifying FICO. In addition, any previously announced minimum Credit Score requirements that TB&W has put into place, that did not have a specified Closing date, will be required to be LOCKED prior to July 13, 2009 AND must CLOSE (Note Date) no later than September 15, 2009, and must be delivered within 10 days after closing. Therefore, any loan, regardless of whether it may be locked, registered or approved, that has a qualifying credit score below 620 (with the exception of those loans that have specified higher FICO requirements) must CLOSE (Note Date) no later than September 15, 2009.

TB&W will continue to allow non-traditional credit for those borrowers with no useable credit for the loan programs that allow the use of such credit in accordance with published guidelines. TB&W is fully aware that these limitations may result in the inability for a particular loan to meet these specified deadlines. TB&W will work as diligently as possible to accommodate all loans in the pipeline. We will be unable to grant any extensions or exceptions to these requirements.

VA Streamline Refinance: What Does This Mean?

Although the FHA/VA guidelines do not officially require a minimum credit score, virtually all lenders (and all of the major lenders) in the US are now requiring a minimum of a 620 credit score. TB&W was the last major US lender who was not requiring that you had at least a 620 minimum credit score. There may still be lenders who are able to do a VA or FHA refinance streamline, but it will be more difficult to find them.

VA Streamline: 7 Things About The VA IRRRL Streamline Refinance

July 2, 2009

Many people contact us every day asking about the highlights of the VA streamline (also known as the VA IRRRL refinance program) so we thought we would put out a simple list of the basic requirements of the VA streamline / VA IRRRL refinance program.

  1. You cannot get any “cash back” at closing when doing a VA streamline / VA IRRRL refinance.
  2. The abbreviation “IRRRL” stands for Interest Rate Reduction Refinancing Loan and is also commonly referred to as a “VA Streamline Refinance”.
  3. If you currently have a fixed rate VA loan, the new interest rate on your new VA loan must be lower than the interest rate on your current VA loan at the end of the VA streamline / VA IRRRL refinance.
  4. If you currently have an adjustable rate VA loan, your interest rate can be higher than it is now as long as your new interest rate is a fixed rate when you participate in the VA streamline / VA IRRRL program.
  5. With the VA streamline / VA IRRRL refinance program, no appraisal is required by the VA. It is possible that certain lenders will require an appraisal for their own purposes, but one is not required by the VA.
  6. The VA streamline / VA IRRRL refinance can be done where you don’t have to pay any “out of pocket” closing costs. All costs may be rolled into your new loan.
  7. You may use any VA approved lender – Veterans are encouraged to shop around.

Still have questions about the VA IRRRL / VA Streamline refinance program? Be sure to contact a VA IRRRL expert today! 888.448.2669

I Got A Streamline Notice In The Mail: What Does It Mean?

June 15, 2009

Many people are getting notices in the mail telling them that they are eligible for either a VA Streamline or a FHA Streamline loan.

What does it mean when it says that you are eligible for a VA streamline or FHA streamline refinance?

It means that you might be eligible to participate in a streamline program where you don’t have to completely re-qualify for a new loan. When you took out your loan, you were required to provide documentation regarding your income, assets and credit profile.

With the FHA and VA streamline programs, you are not required to provide income, asset or credit information (NOTE: although HUD doesn’t require credit information, many lenders are now requiring it — so be sure to ask your loan officer if a minimum credit score is required on a VA streamline loan with the investors that they are using). All that is required (generally speaking) is that you have made your mortgage payments on time for the last 12 months and that you can financially benefit from the FHA or VA streamline transaction.

A FHA or VA streamline refinance is refinancing your mortgage — even though it is much easier and usually faster to do because there are very few moving pieces (when you don’t have to prove income, assets or credit scores, it is much easier to get a loan done).

So if you have gotten a mailer from Wells Fargo, Chase, Citibank, GMAC or any other lender talking about the VA streamline program and how you might be eligible — know that you can speak with any VA approved lender about your file, it is not a requirement that you speak with the lender who sent you the letter!

VA IRRRL Streamline: Owning Multiple Properties

June 8, 2009

Pretend for a moment that you own multiple properties.

Pretend that you have a VA mortgage loan on your primary residence and have another property that is an investment property.

For whatever reason, you have been forced to do a short sale on your investment property – and you have missed more than 5 payments in a row on the property.

But you have always been current on your current VA loan that is your primary residence.

Can you participate in the VA IRRRL streamline program?

It depends on the lender.

If this situation sounds like your situation (or similar) be sure that you explain it in detail to your loan officer who can help you find a lender who will only require a Verification of Mortgage (VOM) on the loan you are currently wanting to streamline.

Even though most lenders today will require that you provide an updated VOM on all properties that you own, it is still possible to find a lender who only requires an updated VOM on the property that you are trying to streamline.

You just have to know where to look.

Oh – and as always, the lenders on the VA streamlines seem to be changing the rules at least weekly – so be sure to keep in contact with your loan officer until your deal funds just to be sure.

VA Streamline: IRRRL Streamline Requirements

May 15, 2009

The VA streamline probably won’t be a viable option for much longer — as interest rates rise, it will make less and less sense for veterans to do a VA streamline because it only makes sense when they can actually lower their interest rate and lower their mortgage payment.

And interest rates aren’t going to stay low forever.

Here are just a couple of things to remember when doing a VA streamline — you don’t have to occupy the property and don’t forget your checklist required for the VA streamline.

VA Streamline Occupancy Rules
The occupancy requirement for an IRRRL is different from other VA loans. When you originally got your VA loan, you certified that you occupied or intended to occupy the home. For an IRRRL you need only certify that you previously occupied it.

VA Streamline Check List

  1. Forms to be signed/filled out prior to submission
  2. URLA (1003)
  3. No Income, asset or liabilities listed (current lien holder and account number listed)
  4. VA addendum to the URLA
  5. Nearest living relative form
  6. Certificate of Eligibility Form 26-1880
  7. VA Benefit-Related Indebtedness Form 26-8937
  8. Federal Collection Policy Notice Form 26-0503
  9. Borrower’s authorization form for us to order credit supplement
  10. IRRRL loan worksheet

When doing a VA streamline (or thinking about doing one) make sure that your loan officer knows about the VA streamline occupancy requirements – you don’t actually have to occupy the property. Many loan officers are not aware of this!

Also, now you have a checklist of what will be needed – and remember that many lenders are now requiring a middle credit score above 620 and possibly an appraisal as well.  I say “many” because not “all” lenders are requiring these things. If your lender is telling you that they require a credit score and an appraisal, it is time to shop around.

VA Streamline Refinance: Is An Appraisal Required? Maybe.

May 7, 2009

For many years, the VA streamline refinance (aka the VA IRRRL program) did not require an appraisal in order for a Veteran to refinance their VA loan and get a lower interest rate.

But that may be changing.

It is not uncommon now for some lenders who lend money on these loans to require some form of an appraisal. It can be a full blown appraisal, it can be a drive-by appraisal — but the point is that many are now requiring it where before they did not. And FHA/VA has not changed their criteria for what they will insure — an appraisal is currently not required in order for a VA streamline to be insured.

As an example, an announcement by Wells Fargo to all correspondent lenders said:

“in an effort to mitigate the risk of declining home values on VA IRRRL transactions on May 18th will require the seller to obtain and deliver a conventional appraisal to Wells Fargo. Please Note: VA has indicated this appraisal should not be submitted to the VA with the guaranty package.”

Does this really make any sense?

Not really.

But it isn’t the first time that things haven’t made sense in the mortgage market recently.

If you are in the market for a VA streamline and your loan officer is telling you that an appraisal is now required, be sure to ask him if he has access to any other VA lenders – many lenders are still not requiring VA streamlines to have an appraisal.