Loan Guaranty: VA-Guaranteed Loans on the Automatic Basis, Withdrawal of Automatic Processing Authority, Record Retention Requirements, and Elimination of Late Reporting Waivers

This document amends the Department of Veterans Affairs (VA) loan guaranty regulations in the areas of automatic processing authority, late reporting, and record retention requirements. First, the criteria used to approve non-supervised lenders to process VA-guaranteed loans on the automatic basis are revised to reduce the experience requirements for lenders and their underwriters, thereby making it easier for them to qualify for automatic processing authority. High underwriting standards will be maintained by requiring that all VA-approved underwriters receive training in VA credit underwriting procedures. Second, the regulation provides that if a lender does not report the loan within 60 days following full disbursement, its report must be accompanied by a signed statement certifying that the loan is current and offering an explanation for the late reporting. This simplifies the prior procedure under which a lender had to formally request a waiver of the 60-day reporting requirement. VA will continue to guarantee the loan even if it is reported late. This will have no impact on whether or not VA guarantees the loan but would help VA determine whether action should be taken against a lender. Third, lenders are now required to retain all loan origination records for at least two years from the date of loan closing. The previous requirement was one year. This will improve VA's ability to monitor lender performance and conduct underwriting reviews.