In Change 2 To Circular 26-20-10 As of June 29, 2021, the United States Department of Veterans Affairs (VA) updated guidelines for lenders helping VA mortgage applicants affected by the national COVID-19 emergency.
When it comes to income verification, the VA advises lenders to continue to use good judgment and flexibility when verifying a borrower’s income and determining if that income is stable and reliable, and should do everything possible. to meet long-standing VA requirements for employment verification as described in VA Booklet 26-7, Chapter 4, Credit Underwriting.
Regarding the income analysis, the VA says that while it generally requires the borrower’s income to be stable and reliable for two years, whether the COVID-19 pandemic has affected the stability or reliability of income (for example, due to leave, reduction of income, etc.), the lender should not consider the negative effects as an interruption of employment or income, as long as the borrower has returned, or should return, work with the same capacity and the same level of income. The VA notes that as part of the income verification documentation, the borrower must provide a discharge letter, if applicable. The VA also informs that it continues to encourage lenders to document their analyzes and justifications for all borrowers, in particular “borderline” cases and to upload the supporting documents on WebLGY.
The VA says it encourages the use of eMortgages and is actively working with other federal housing agencies and the Government National Mortgage Association (GNMA) to increase access to eMortgages. While the VA has not issued specific VA requirements for electronic notarization of loan closing documents, it does indicate that if an electronic notarization, including electronic in-person notarization (IPEN) or online notarization remote (RON), is otherwise valid and efficient, the VA will not view electronic notarization as a deficiency against VA loan processing standards.
The VA reminds lenders that when the veteran is required to pay a financing fee, the loan cannot be secured until the fee has been remitted to the VA. The VA advises that if the effects of the national COVID-19 emergency jeopardize a lender’s ability to timely pay financing charges to the VA, the lender should, as soon as possible, contact a regional lending center by calling 1-877-827-3702.