VA Policy Updates on IRRRLs – Revised

Updated policy is highlighted below

VA Circular 26-19-17 issued June 28, 2019 detailed changes to VA’s policy regarding IRRRLs.  The following are highlights the new VA requirements for IRRRLs.

Effective immediately, a Certificate of Eligibility (COE) is now required on all IRRRL transactions to determine if the veteran is exempt from paying the funding fee.

Veterans

• If the COE indicates the veteran is not exempt from paying the funding fee, the following is required:
  • The veteran must acknowledge, in writing, if they do or do not have a pending claim for compensation filed with the VA and the documentation must be retained in the loan file. The following options are acceptable documentation:
    • An email from the veteran to the broker/NDC, OR
    • The veteran can complete and sign one of the following:
      • The Homebridge VA Pending Claims Certification, OR
      • The Homebridge VA Indebtedness Questionnaire (Section II)
  • If the veteran acknowledges a pending claim using one of the methods above, Homebridge will contact VA to determine funding fee exemption status

Active Duty Servicemembers

• All IRRRL transactions where the borrower is an active duty servicemember will require the servicemember to complete and sign one of the following:
  • VA form 26-8937 Verification of VA Benefits, which validates whether or not the servicemember has a pre-discharge claim pending (Section 8), OR
  • Homebridge VA Indebtedness Questionnaire (Section II)
• If VA form 26-8937 or the Homebridge VA Indebtedness Questionnaire indicate the active duty servicemember does have a pending pre-discharge claim, Homebridge will contact the VA Regional Loan Center (RLC) to obtain a proposed or memorandum rating in the event the servicemember will be exempt from the funding fee.

NOTE:  If the documentation is not obtained from the RLC prior to loan closing, the servicemember is not eligible for the funding fee exemption (if exemption was applicable)

Documentation

• The IRRRL section of the VA Submission form has been updated to include:
  • The requirement for the COE on all IRRRL transactions, and
  • VA Form 26-8937, and
  • HomeBridge VA Indebtedness Questionnaire
• Active Duty Servicemembers: One of the following:
  • VA Form 26-8937, or
  • Homebridge VA Indebtedness Questionnaire
• Veteran (and COE indicates the veteran is not exempt from the funding fee): One of the following:
  • The Homebridge VA Pending Claims Certification, or
  • The Homebridge VA Indebtedness Questionnaire, or
  • An email/written documentation from the veteran to document pending claim status
• The VA IRRRL guidelines have been updated and posted

The forms referenced above are posted on the Homebridge website on the Forms page under “VA Specific