The Department of Veterans Affairs is planning several changes to its loan guaranty regulations as part of its 1995 regulatory agenda, including altering its pre-foreclosure and late loan reporting waiver requirements, and minor updates to its credit and underwriting standards.
The agenda, outlined in the Nov. 14 Federal Register, sets no legal deadlines for the proposed regulations, and the timetable for further action on each is uncertain. However, action is expected on most issues by the end of 1995. VAs mortgage loan agenda for 1995 includes:
Pre-Foreclosure Debt Waivers
The proposed regulation will amend VAs loan guaranty regulation definition of property improvements to determine the net value of a foreclosed property and to clarify the departments position on pre- foreclosure debt waivers for liable veterans in cases involving transferee defaults.
Automatic Loan Closings
This regulation aims to approve nonsupervised lenders to process VA-guaranteed loans on an automatic basis. VA is reviewing requirements for the lender participation program based on lender experience, working capital, lines of credit, and VA-approved underwriter eligibility and training.
Late Loan Reporting Waivers
Revised regulations will require lenders to report VA- guaranteed loans within 60 days after full disbursement. The reg still wont look approvingly on late reports, but will require that a lenders report if 60 days or more late be accompanied by a statement signed by a corporate officer certifying the loan is current and explaining why the filing was late.
Conveyance of Properties
Regulations covering title evidence will be modified to specify the title documentation necessary for conveyance of properties to VA and set a due date for them. Present regulations give loan holders a choice of forms of title evidence when conveying a title to VA.
Credit & Underwriting Standards
Loan guaranty regulation amendments will update the residual income guidelines in VAs credit underwriting standards. Underwriting guidelines are also being added to cover foreclosures and federally related debts, and to provide specific time frames for determinations regarding employment.