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Announcement 19-0014: VA Refinance Transactions with DU Refer Recommendation

February 20, 2019


During the weekend of Feb. 16, 2019 Desktop Underwriter (DU) for government loans was updated to support the new LTV calculation required by Veteran Affairs (VA) Circular 26-18-30. Specifically, VA refinance loans where the total LTV exceeds 100% of the appraised value due to financing the VA Funding Fee will now receive a Refer recommendation.

Loans with applications dated prior to Feb. 15, 2019 remain eligible to finance the Funding Fee in excess of the appraised value; however, this may result in the DU rescoring to Refer findings due to the DU update. Loans with Refer findings must be manually underwritten and meet the requirements for VA manual underwriting, including, but not limited to, providing explanations for derogatory credit. It is anticipated that any loan previously approved using DU Approve findings will remain eligible for manual underwriting without requiring a change to the loan amount, subject to meeting the manual underwriting documentation requirements.

Loans with applications dated on or after Feb. 15, 2019 must meet the LTV calculation set forth in VA Circular 26-18-30. The total LTV including any financed Funding Fee may not exceed 100% of the appraised value of the subject property.


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