Loan Officer Training - 12/26/2024 - How to Structure VA Loans for Loan Officers

In this episode of Loan Officer Training, we focus on the essential steps to successfully structure VA loans. Tailored for loan officers, this episode covers everything from understanding the unique features of VA loans to creating strategies that cater to the needs of veteran clients. Discover how to navigate eligibility requirements, maximize loan benefits, and provide exceptional service to those who have served our country. Whether you're just starting out or refining your expertise, this episode is a must-listen for any loan officer looking to excel in VA lending.

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About The Mortgage Calculator:

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of over 350 licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages, P&L Mortgages, Asset Based Mortgage Programs, No Ratio CDFI Loan Programs, DSCR Investor Mortgages, Commercial Mortgages, Fix and Flip Mortgages and thousands more!

Our Mortgage Loan Originators are trained to be loan consultants to guide borrowers throughout the entire loan process. A licensed Loan Officer is only a phone call or zoom meeting away and always available t

Catch all the episodes of the Loan Officer Training Podcast at https://themortgagecalculator.com/Page/Loan-Officer-Training-Series-Podcast

Catch all the episodes of the Loan Officer Training Podcast at https://themortgagecalculator.com/Page/Loan-Officer-Training-Series-Podcast

Loan Officers for Unlimited Free Non-QM Leads & Trainings Join The Mortgage Calculator at https://themortgagecalculator.com/join

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as thousands of Non-QM mortgage loan program variations using alternative income documentation!

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as acc...

Transcript

Restream recording Dec 26, 2024 • 05:03:18 PM: 0:13

So VA home loans are for active military veterans and spouses of deceased active military or veterans. Uh, this is very important to note, uh, confusions on VA loans. about adding, uh, co borrowers to the loan. Okay. So the, the only, uh, co borrower that you can add to a VA loan to maintain 100 percent LTV is the spouse of the VA loan. Now the VA loan could also be, um, applied for by the, uh, Spouse of a deceased active military or veteran, right? But however, please note. That if you do need to, uh, uh, add a, um, a co borrower, who's not a relative, like for example, uh, a, a, uh, son, daughter, mother, father, grandmother, grandfather, whoever you're adding to the loan, please note that that, um, has to be with the prior written authorization of the VA, okay. You got, you have to request the exception. There has to be a reason for it. And also it is going to result in a lower loan to value. Typically the loan to value you're going to be looking at. When you are using a, an unmarried, uh, co borrower is 85%. So you have to make sure then that the VA loan is the only option for you, for your borrower then, because at that point it will no longer be a 100 percent loan to value. It'll be 85 percent loan to value. So keep in mind that is going to be the situation when you have an unmarried co borrower. Uh, so to recap it, cause I see a couple of people who just came on, um, VA loans are for active military veterans and spouses of deceased active military or veteran. Uh, that's how you get a hundred percent LTV. However. When you, you, when you bring in a co borrower that's not married to the active military or veteran borrower, then your loan to value is reduced to 85%. Uh, please do note that the borrower needs to have served a minimum amount of time, either in active duty or in the reserves, to qualify for the VA loan benefit. You're looking at two years of continuous active duty or six years of combined service in the reserves or National Guard. So do know those very critical time factors. Now, Obviously, in order to proceed with the VA loan, you need to have a Certificate of Eligibility, also known as the COE. Do not confuse the Certificate of Eligibility with a discharge document. Which is the DD 214 the DD 214 just confirms that the individual was in the military that they are now discharged it will state You know how they were discharged and the service what branch of the military they were in however in no way does a DD 214 confirm the veteran or active militaries Eligibility for a VA loan. In this case, a DD 214 would only be for a veteran, right? You're not going to have a DD 214 if you're currently in the active, if you're currently active in the military. So do not confuse the borrower providing a DD 214 As a certificate of eligibility, the certificate of eligibility can be requested by the borrower from the VA directly. Or you, the MLO can also request it from the L G Y portal, right? That's the portal that we access in order to process any of these VA loans, right? You need to have credentials to the L G Y portal to be able to request the certificate of eligibility through the L G Y portal. You need to have credentials to the LGY portal to be able to order the appraisal and communicate with the VA and the VA appraiser. Right. You do not order the appraisal on a VA loan through appraisal works or through the AMCs. You order it through the LGUI portal, and you also order the certificate of eligibility through the LGUI portal. Those are the two main things that you're going to need access to the LGUI credentials so you can access the LGUI portal. Also, when you want to, you know, do research. On your loan and get all of the, uh, features of the LGY portal active. You have to log into the LGY portal. So make sure that you get those credentials because they're not immediately obtained, right? You have to go do a couple of different steps. You have to get your, uh, your ID, me, uh, ID, verify a third party verification account, uh, can properly configured so that you have access to the email account that you're using. To do, uh, to be able to, um, complete the multi factor authorization, right? So, uh, make sure, again, LGY portal credentials, and then also, uh, make sure that when you are in your LOS, in this case, well, we're using Compass. It is essential, right? You're going to get your certificate of eligibility. The certificate of eligibility is going to have certain information like the, the loan code and the entitlement amount, uh, branch of the military that they served in or currently serving in and some other factors, some other, uh, data points that you will need from the certificate of eligibility. that then you will need to enter that information in the VA forms that are in ENCOMPASS, right? Specifically, uh, the two main forms we're looking at is the VA Management form and the VA Loan Summary form. Both these forms need to be completed prior to your running the VA. automated underwriting, uh, through Encompass. Yes, for VA loans, we do run automated underwriting through Encompass, whether you're using LP or whether you're using DU. Uh, it is highly recommended that you complete the VA Management and VA Loan Summary forms once you have the Certificate of Eligibility. Complete both of those forms in Encompass so that when you do run automated underwriting, you do 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 get a DU approval if it's an approvable deal, but it's not going to be taken into consideration. Important factors like the entitlement amount, uh, for this borrower, uh, amongst other things. And even if they are entitled to a VA loan, you won't really know that until you have the certificate of eligibility form. So real important. Uh, you can't really be providing a pre approval to a VA borrower unless they've already provided or you've already obtained a certificate of eligibility to confirm that they are eligible for a VA loan. One other form that's, uh, needed and usually missed is the nearest living relative slash child care statement form. If you don't complete this form, you will receive an error or a warning, an alert, uh, in your findings. Your DU findings aren't going to be correct, and when you go try to get the file disclosed, it's not going to be complete, uh, with the needed documents to be able to disclose the file unless the nearest living relative slash child care statement form is completed. And that is a form found in the forms section of, uh, encompass or whichever, uh, loan software loan originating software that you use. Now, when you are looking to structure the file, keep in mind the overlays that are present regarding credit scores, right? Uh, VA lists general requirements in the guidelines. But the different investors may change, may add what's called overlays to the guidelines, right? They're going to put a minimum credit scores overlays. So when you are structuring your deals, make sure that you pay attention to the overlays that the different investors are inputting, because once you have the credit report, now, you know exactly where you stand so that you can properly structure. Your deal and that, and so you have the right investor where you're going to be able to submit that file too. Right now, this is very important because, uh, you know, credit score is one of the components obviously to consider, but so is DTI, right? When you're structuring your VA deal, do not make any type of a decision until automated underwriting has been run. And until you have your findings, because they, we all know that maximum DTI is determined by a U S, but also something that's very important on VA loans is residual income. That's why you need to complete the VA management form. You need to complete the VA loan summary form. Uh, you need to have all those, all those factors taken into consideration, uh, so that V, um, the. LOS and DU or LP, whichever you use can determine the residual income of this borrower. And then depending on the number of members of the family, that's why it's important to fill out these forms because you're going to put in how many members are in the family, where they live, all that kind of good stuff. The system will determine the minimum residual income required. for that borrower. So, assuming it's a family of two in a certain part of the country, um, the system may determine that the residual income is 1500, right? So, if that borrower meets the residual income requirement, there's a very good possibility that even with a 60, 61, 62 percent DTI, your borrower will still receive the approved eligible. Thank you. And that is because they met the residual income requirement. Conversely, you could have a situation where the DTI is good. The DTI is, you know, within the scope of what you need, or at least you think it is, but the residual income requirement is not met. It is below the minimum for that family size for that area, and DU will not approve the file. Residual income is basically the money that you have left over after meeting your obligations to live. So after meeting your housing obligation and your credit card minimum monthly payments, How much money do you have left over to actually live, right? To pay your pay electricity, to pay, you know, your utilities, to buy food, you know, just, uh, the incidental expenses of life that would have to be paid by whatever income you have left over after meeting your debt obligations. That's residual income. If the system doesn't, you know, picks up that you haven't met the residual income, then you're not going to get the approval. And conversely, I've had them at 63 percent DTI and I have received the approved eligible. And then in other cases I've had DTI it's much lower than that, that I thought would work and when I ran automated underwriting, didn't get the approved eligible because the residual income amount was too low. So don't, don't be, that's a, another really important reason why we would never, ever, ever. ever, ever provide a pre approval letter based on anything other than taking a complete application and running the application through automated underwriting. Because you could get a scenario where you think, oh yeah, DTI, you know, you do your pre qual, DTI looks good, You're within what normally would be approved by, uh, VA, uh, MLO says, Oh, this is good, good enough for me. It gives the borrower a pre approval letter. Hey, you're pre approved up to X dollar amount. Then contract is, is, is received. Formal loan application submitted runs through AUS and then you don't get the approval because you don't meet the residual income requirements. That has happened. That can happen. We don't want that to happen here at the Mortgage Calculator. So for our pre approvals that we provide, it's a complete application review documentation. If it's an agency loan, which is FHA, VA, USDA, conventional, Those are run through automated underwriting. USDA is Gus, right? Uh, the GUS portal. Uh, but that's what we need to do on all of those. If it's non qm, you are the du, you're the filter. There is no automated underwriting on non QM loans. So you have to gather all the documents, get the credit report, review documents, review credit, review the loan structure, find the guidelines that are best for that, for the structure of that particular loan, and then confirm. that the loan parameters do meet all the guideline restrictions that may be present from that investor and then you give your pre approval letter. That's how it works with us now in QM. An agency, we run it through automated underwriting. So I want to see if there's any questions for the BA loans. This is an overview basically for loan officers. VA loans. I mean, there's definitely uh much more information uh regarding specifics on VA loans and what we give in these trainings but we want to make sure you have these essential steps. Uh you know, like getting your credentials and understanding that you need credentials for the Lgy portal. You don't want to have that loan application and all of a sudden, you gotta give it away because you don't have your VA credentials. It's going to take a couple of days to get them and we cannot hold back that purchase file. So don't get caught in that situation and make sure that you have your LGY portal credentials. So I'll give it another minute to see if we have any questions here on VA loans. VA loans are obviously, uh, an amazing loan program. They are, um, and we're getting a lot of activity now with, uh, you know, agency loans, right? Especially now that the holidays are going to be over pretty soon. In the new year, we're going to have a lot of, uh, purchases taking place in the agency world, VA, USDA, FHA, and conventional. And you want to be ready. You want to be locked and loaded to be able to, uh, capture those applications and submit your loans. especially your VA loans, to the LGY portal. All right, so I don't see any questions here. I do thank you for being on today's training. Uh, just a reminder, we're only having these trainings now on Thursdays, so I will look forward to seeing you on next week's, next Thursday's training. Have a great day.