Announcement 19-0056: VA Funding Fee Update & IRRRL Certificate of Eligibility Requirement

Overview

The VA has implemented changes to ensure Veterans’ funding fee exemption information is up-to-date at the time of closing to avoid incorrect charges to exempt Veterans. Lenders may not advise Veteran borrowers who believe they are exempt from paying the funding fee to close on a loan without first establishing the borrower’s funding fee exemption status.

Effective immediately, a Certificate of Eligibility (COE) will be required for all VA IRRRLs to determine whether the Veteran borrower has a funding fee exemption.

For all loans (Full Doc and IRRRL) where the COE does not show the Veteran is exempt from paying the funding fee, the Veteran must answer the following questions:

1. Does the Veteran have a claim for compensation pending with the VA?
2. If the Veteran is an Active Duty Servicemember, does he or she have a pre-discharge claim pending?

The CMS VA Disability Questionnaire has been updated to include these questions.  The Veteran is not required to use the CMS form; however, the Veteran must provide either a completed CMS VA Disability Questionnaire or the Lender’s version of the Disability Questionnaire in a substantially similar format prior-to-docs (PTD).

If the Veteran has a claim for compensation pending with VA, an updated COE must be obtained within three (3) days of the note date using the COE “Correct” function in WebLGY.

If an Active Duty Servicemember has a pre-discharge claim pending, the Lender must contact the Regional Loan Center (RLC) immediately to request assistance in obtaining a proposed or memorandum rating in the event the Servicemember may be exempt from paying the funding fee as noted above. If a proposed or memorandum rating is not obtained and loan closing takes place, the Servicemember is not eligible for funding fee exemption.

Resources

The CMS VA Disability Questionnaire is available at Resources > Forms. Or download here.

Contacts

Please contact CorrespondentRM@carringtonms.com with any questions.

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