Episode Transcript
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Restream recording Dec 26, 2 (00:00):
So
VA home loans are for active
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military veterans and spouses ofdeceased active military or
veterans.
Uh, this is very important tonote, uh, confusions on VA
loans.
about adding, uh, co borrowersto the loan.
Okay.
So the, the only, uh, coborrower that you can add to a
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VA loan to maintain 100 percentLTV is the spouse of the VA
loan.
Now the VA loan could also be,um, applied for by the, uh,
Spouse of a deceased activemilitary or veteran, right?
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But however, please note.
That if you do need to, uh, uh,add a, um, a co borrower, who's
not a relative, like forexample, uh, a, a, uh, son,
daughter, mother, father,grandmother, grandfather,
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whoever you're adding to theloan, please note that that, um,
has to be with the prior writtenauthorization of the VA, okay.
You got, you have to request theexception.
There has to be a reason for it.
And also it is going to resultin a lower loan to value.
Typically the loan to valueyou're going to be looking at.
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When you are using a, anunmarried, uh, co borrower is
85%.
So you have to make sure thenthat the VA loan is the only
option for you, for yourborrower then, because at that
point it will no longer be a 100percent loan to value.
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It'll be 85 percent loan tovalue.
So keep in mind that is going tobe the situation when you have
an unmarried co borrower.
Uh, so to recap it, cause I seea couple of people who just came
on, um, VA loans are for activemilitary veterans and spouses of
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deceased active military orveteran.
Uh, that's how you get a hundredpercent LTV.
However.
When you, you, when you bring ina co borrower that's not married
to the active military orveteran borrower, then your loan
to value is reduced to 85%.
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Uh, please do note that theborrower needs to have served a
minimum amount of time, eitherin active duty or in the
reserves, to qualify for the VAloan benefit.
You're looking at two years ofcontinuous active duty or six
years of combined service in thereserves or National Guard.
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So do know those very criticaltime factors.
Now, Obviously, in order toproceed with the VA loan, you
need to have a Certificate ofEligibility, also known as the
COE.
Do not confuse the Certificateof Eligibility with a discharge
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document.
Which is the DD 214 the DD 214just confirms that the
individual was in the militarythat they are now discharged it
will state You know how theywere discharged and the service
what branch of the military theywere in however in no way does a
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DD 214 confirm the veteran oractive militaries Eligibility
for a VA loan.
In this case, a DD 214 wouldonly be for a veteran, right?
You're not going to have a DD214 if you're currently in the
active, if you're currentlyactive in the military.
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So do not confuse the borrowerproviding a DD 214 As a
certificate of eligibility, thecertificate of eligibility can
be requested by the borrowerfrom the VA directly.
Or you, the MLO can also requestit from the L G Y portal, right?
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That's the portal that we accessin order to process any of these
VA loans, right?
You need to have credentials tothe L G Y portal to be able to
request the certificate ofeligibility through the L G Y
portal.
You need to have credentials tothe LGY portal to be able to
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order the appraisal andcommunicate with the VA and the
VA appraiser.
Right.
You do not order the appraisalon a VA loan through appraisal
works or through the AMCs.
You order it through the LGUIportal, and you also order the
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certificate of eligibilitythrough the LGUI portal.
Those are the two main thingsthat you're going to need access
to the LGUI credentials so youcan access the LGUI portal.
Also, when you want to, youknow, do research.
On your loan and get all of the,uh, features of the LGY portal
active.
You have to log into the LGYportal.
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So make sure that you get thosecredentials because they're not
immediately obtained, right?
You have to go do a couple ofdifferent steps.
You have to get your, uh, yourID, me, uh, ID, verify a third
party verification account, uh,can properly configured so that
you have access to the emailaccount that you're using.
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To do, uh, to be able to, um,complete the multi factor
authorization, right?
So, uh, make sure, again, LGYportal credentials, and then
also, uh, make sure that whenyou are in your LOS, in this
case, well, we're using Compass.
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It is essential, right?
You're going to get yourcertificate of eligibility.
The certificate of eligibilityis going to have certain
information like the, the loancode and the entitlement amount,
uh, branch of the military thatthey served in or currently
serving in and some otherfactors, some other, uh, data
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points that you will need fromthe certificate of eligibility.
that then you will need to enterthat information in the VA forms
that are in ENCOMPASS, right?
Specifically, uh, the two mainforms we're looking at is the VA
Management form and the VA LoanSummary form.
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Both these forms need to becompleted prior to your running
the VA.
automated underwriting, uh,through Encompass.
Yes, for VA loans, we do runautomated underwriting through
Encompass, whether you're usingLP or whether you're using DU.
Uh, it is highly recommendedthat you complete the VA
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Management and VA Loan Summaryforms once you have the
Certificate of Eligibility.
Complete both of those forms inEncompass so that when you do
run automated underwriting, youdo not receive errors that are
going to be present.
If the form is not completed,it's not going to be able to, I
mean, you're, you're, you'll geta DU approval if it's an
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approvable deal, but it's notgoing to be taken into
consideration.
Important factors like theentitlement amount, uh, for this
borrower, uh, amongst otherthings.
And even if they are entitled toa VA loan, you won't really know
that until you have thecertificate of eligibility form.
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So real important.
Uh, you can't really beproviding a pre approval to a VA
borrower unless they've alreadyprovided or you've already
obtained a certificate ofeligibility to confirm that they
are eligible for a VA loan.
One other form that's, uh,needed and usually missed is the
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nearest living relative slashchild care statement form.
If you don't complete this form,you will receive an error or a
warning, an alert, uh, in yourfindings.
Your DU findings aren't going tobe correct, and when you go try
to get the file disclosed, it'snot going to be complete, uh,
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with the needed documents to beable to disclose the file unless
the nearest living relativeslash child care statement form
is completed.
And that is a form found in theforms section of, uh, encompass
or whichever, uh, loan softwareloan originating software that
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you use.
Now, when you are looking tostructure the file, keep in mind
the overlays that are presentregarding credit scores, right?
Uh, VA lists generalrequirements in the guidelines.
But the different investors maychange, may add what's called
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overlays to the guidelines,right?
They're going to put a minimumcredit scores overlays.
So when you are structuring yourdeals, make sure that you pay
attention to the overlays thatthe different investors are
inputting, because once you havethe credit report, now, you know
exactly where you stand so thatyou can properly structure.
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Your deal and that, and so youhave the right investor where
you're going to be able tosubmit that file too.
Right now, this is veryimportant because, uh, you know,
credit score is one of thecomponents obviously to
consider, but so is DTI, right?
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When you're structuring your VAdeal, do not make any type of a
decision until automatedunderwriting has been run.
And until you have yourfindings, because they, we all
know that maximum DTI isdetermined by a U S, but also
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something that's very importanton VA loans is residual income.
That's why you need to completethe VA management form.
You need to complete the VA loansummary form.
Uh, you need to have all those,all those factors taken into
consideration, uh, so that V,um, the.
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LOS and DU or LP, whichever youuse can determine the residual
income of this borrower.
And then depending on the numberof members of the family, that's
why it's important to fill outthese forms because you're going
to put in how many members arein the family, where they live,
all that kind of good stuff.
The system will determine theminimum residual income
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required.
for that borrower.
So, assuming it's a family oftwo in a certain part of the
country, um, the system maydetermine that the residual
income is 1500, right?
So, if that borrower meets theresidual income requirement,
there's a very good possibilitythat even with a 60, 61, 62
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percent DTI, your borrower willstill receive the approved
eligible.
Thank you.
And that is because they met theresidual income requirement.
Conversely, you could have asituation where the DTI is good.
The DTI is, you know, within thescope of what you need, or at
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least you think it is, but theresidual income requirement is
not met.
It is below the minimum for thatfamily size for that area, and
DU will not approve the file.
Residual income is basically themoney that you have left over
after meeting your obligationsto live.
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So after meeting your housingobligation and your credit card
minimum monthly payments, Howmuch money do you have left over
to actually live, right?
To pay your pay electricity, topay, you know, your utilities,
to buy food, you know, just, uh,the incidental expenses of life
that would have to be paid bywhatever income you have left
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over after meeting your debtobligations.
That's residual income.
If the system doesn't, you know,picks up that you haven't met
the residual income, then you'renot going to get the approval.
And conversely, I've had them at63 percent DTI and I have
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received the approved eligible.
And then in other cases I've hadDTI it's much lower than that,
that I thought would work andwhen I ran automated
underwriting, didn't get theapproved eligible because the
residual income amount was toolow.
So don't, don't be, that's a,another really important reason
why we would never, ever, ever.
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ever, ever provide a preapproval letter based on
anything other than taking acomplete application and running
the application throughautomated underwriting.
Because you could get a scenariowhere you think, oh yeah, DTI,
you know, you do your pre qual,DTI looks good, You're within
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what normally would be approvedby, uh, VA, uh, MLO says, Oh,
this is good, good enough forme.
It gives the borrower a preapproval letter.
Hey, you're pre approved up to Xdollar amount.
Then contract is, is, isreceived.
Formal loan applicationsubmitted runs through AUS and
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then you don't get the approvalbecause you don't meet the
residual income requirements.
That has happened.
That can happen.
We don't want that to happenhere at the Mortgage Calculator.
So for our pre approvals that weprovide, it's a complete
application reviewdocumentation.
If it's an agency loan, which isFHA, VA, USDA, conventional,
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Those are run through automatedunderwriting.
USDA is Gus, right?
Uh, the GUS portal.
Uh, but that's what we need todo on all of those.
If it's non qm, you are the du,you're the filter.
There is no automatedunderwriting on non QM loans.
So you have to gather all thedocuments, get the credit
report, review documents, reviewcredit, review the loan
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structure, find the guidelinesthat are best for that, for the
structure of that particularloan, and then confirm.
that the loan parameters do meetall the guideline restrictions
that may be present from thatinvestor and then you give your
pre approval letter.
That's how it works with us nowin QM.
An agency, we run it throughautomated underwriting.
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So I want to see if there's anyquestions for the BA loans.
This is an overview basicallyfor loan officers.
VA loans.
I mean, there's definitely uhmuch more information uh
regarding specifics on VA loansand what we give in these
trainings but we want to makesure you have these essential
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steps.
Uh you know, like getting yourcredentials and understanding
that you need credentials forthe Lgy portal.
You don't want to have that loanapplication and all of a sudden,
you gotta give it away becauseyou don't have your VA
credentials.
It's going to take a couple ofdays to get them and we cannot
hold back that purchase file.
So don't get caught in thatsituation and make sure that you
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have your LGY portalcredentials.
So I'll give it another minuteto see if we have any questions
here on VA loans.
VA loans are obviously, uh, anamazing loan program.
They are, um, and we're gettinga lot of activity now with, uh,
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you know, agency loans, right?
Especially now that the holidaysare going to be over pretty
soon.
In the new year, we're going tohave a lot of, uh, purchases
taking place in the agencyworld, VA, USDA, FHA, and
conventional.
And you want to be ready.
You want to be locked and loadedto be able to, uh, capture those
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applications and submit yourloans.
especially your VA loans, to theLGY portal.
All right, so I don't see anyquestions here.
I do thank you for being ontoday's training.
Uh, just a reminder, we're onlyhaving these trainings now on
Thursdays, so I will lookforward to seeing you on next
week's, next Thursday'straining.
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Have a great day.