Greetings,

Loan Guaranty Release 20.3 was installed on May 3, 2020.  The release includes enhancements to assist lenders in guaranteeing Interest Rate Reduction Refinance Loans (IRRRLs), mitigate data entry errors, and ensure compliance with program requirements. 

Lenders are now able to obtain a Loan Guaranty Certificate (LGC) for IRRRLs without VA assistance when the interest rate of the prior loan has changed as a result of a loan modification and/or adjustable rate mortgage (ARM).  At the beginning of the guaranty process, lenders will be required to enter the first payment due date of the prior loan and certify that at least 6 consecutive monthly payments were made.  If the interest rate of the prior loan changed as a result of a loan modification or adjustable rate mortgage, the lender will be allowed to enter the current interest rate of the prior loan.  Provided that the loan satisfies the various compliance checks implemented in WebLGY, the lender will be able to proceed and generate the LGC.  

Additionally, WebLGY will check to ensure compliance with the following rules prior to the creation of the LGC:

• If the prior loan has a fixed interest rate and the IRRRL has a fixed interest rate, the IRRRL interest rate must be at least 0.50 percent less than the prior loan (fixed-to-fixed).

• If the prior loan has a fixed interest rate and the IRRRL has an adjustable interest rate, the current IRRRL interest rate must be at least 2 percent less than the prior loan (fixed-to-ARM).
• Validation of prior loan seasoning.

Lenders are reminded to continue to adhere to all statutes, regulations, and policies concerning IRRRLs, including but not limited to, VA Circulars 26-19-22 and 26-20-16. 

Sincerely,

Loan Guaranty Service