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Loan Guaranty Service
Quick Reference Document
For
Cash-Out Refinances
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Contents
Introduction ................................................................................................................................................... 3
Appraisal Request for Cash-Out Refinance .................................................................................................. 3
Compliance Disclosures for Cash-Out Refinance Loans .............................................................................. 4
Issuing the Guaranty for Cash-Out Refinance Loans ................................................................................... 5
Cash-Out Refinance Loan Information Page ................................................................................................ 5
Veteran Information Page ............................................................................................................................. 7
Type 1 vs. Type 2 Cash-Out Refinance ........................................................................................................ 8
Initial Disclosure of New Loan ..................................................................................................................... 9
Comparison of Loan being Refinanced to New Loan ................................................................................. 13
Quick Reference Document for Cash-Out Refinances
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Introduction
Procedures outlined in this Quick Reference Document (QRD), assists lenders with guaranteeing
cash-out refinance loans in WebLGY. This self-service functionality is available following the
WebLGY 19.3 software release.
The overview of the process:
• Lender Appraisal Processing Program (LAPP) or Independent (IND) Appraisal Request
• Upload the appropriate documents to appraisal correspondence
• Issue the Guaranty for the Cash-Out Refinance Loan
Appraisal Request for Cash-Out Refinance
WebLGYLoanRequest AppraisalSelect LAPP or IND Request Type
• Complete the required fields in the Appraisal Request form
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•
Ensure 3G. “Sale or Refinance?” input is “Refinance Price” in the Property Information
Section of the appraisal request.
Compliance Disclosures for Cash-Out Refinance Loans
Upon successful creation of the appraisal request, upload the Initial Cash-Out Compliance
Disclosure and the Final Cash-Out Compliance Disclosure documents to the appraisal record.
WebLGY AppraisalDocumentsCorrespondence
Quick Reference Document for Cash-Out Refinances
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With an original loan application date on, or after February 15, 2019, at least one of each of the
documents listed below are required for the guaranty issue of a Cash-Out refinance.
• Initial Cash-Out Compliance Disclosure
• Final Cash-Out Compliance Disclosure
Issuing the Guaranty for Cash-Out Refinance Loans
1. Loan being refinanced information is required
2. Initial Disclosure of new loan information is required
3. Auto-calculation to determine Type 1 versus Type 2 refinance
4. Auto-determination of net tangible benefit(s) to the Veteran for the refinance; at least 1
must be found.
5. Seasoning certification is required for all VA to VA refinances
6. Recoupment certification is required for all Type 1 VA to VA refinances
Cash-Out Refinance Loan Information Page
A guaranty is not allowed for a Cash-Out refinance if the compliance disclosures have not been
uploaded to appraisal correspondence for the Loan Identification Number (LIN). See
Compliance Disclosures for Cash-Out Refinance Loans for more information.
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Once the appraisal is in the Notice of Value (NOV) Issued status, the Issue Guaranty link on the
left navigation menu of the appraisal is available. The user must have access to the Establish
New Loan functionality in order to access the Issue Guaranty link. For more information please
contact your Regional Loan Center (RLC) representative.
WebLGY AppraisalAppraisal ProcessingIssue Guaranty
Selecting the Issue Guaranty link takes the user to the Cash-Out Refinance Loan Information
page to enter the Original Loan Application Date (MM/DD/YYYY).
Note: The original loan application date must be on, or before the date of the appraisal request.
For any loan with an original loan application date before February 15, 2019, the original
application date is the only required field. All other fields will be grayed. Selecting the Veteran
Information link will allow the user to proceed through to the standard issue guaranty process.
For loans with an original loan application date on, or after February 15, 2019, the following
additional information is required on the Cash-Out Refinance Loan Information page:
Quick Reference Document for Cash-Out Refinances
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• Payoff amount of loan being refinanced
• Is this loan refinancing an existing VA-guaranteed loan? (Yes/No)
o If refinancing an existing VA-guaranteed loan, the LIN of the loan being
refinanced is required.
Note: When ‘Yes’ is selected for the question: “Is this loan refinancing an existing VA-
guaranteed loan?” and the LIN is entered, several validations are performed on the LIN.
• The LIN entered must be a valid, 12-digit VA loan ID number.
• The loan must be in 'Active' status.
• The Veteran Social Security Number (SSN) on the Funding Fee record for the LIN
must be the same as the Veteran SSN on the Funding Fee Record for the new loan. (The
primary obligor SSN is compared in the case that multiple obligors exist.)
• AND at least one of the following 2 validations must be true:
o The Office of Origination – Office of Jurisdiction (OO-OJ) Code (first 4 digits of
the LIN) must be the same as the OO-OJ code of the new loan.
o The city, state, county (all considered together) must be the same as the new loan.
Selecting the Veteran Information link after completing all required fields will direct the user to
proceed through to the new Loan Summary/Issue Guaranty page for Cash-Out Refinance Loans.
Veteran Information Page
In the case that the Veteran information is not complete, the Veteran information page is
presented to the user for updates. Required fields must be entered before the user is allowed to
proceed to the loan summary/issue guaranty page.
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Type 1 vs. Type 2 Cash-Out Refinance
Based on the data entered about the loan being refinanced on the Cash-Out Loan Information
Page, the system will determine for the user if the new loan is a Type 1 or Type 2 cash-out
refinance.
A Type 1 cash-out refinance occurs when the loan amount of the new loan is less than or equal to
100 percent of the payoff amount of the loan being refinanced.
Requirements for Type 1 VA to VA Refinance:
• Seasoning Certification
• Fee Recoupment Period Certification
• At least one Net Tangible Benefit to the Veteran
• Document Type = Initial Cash-Out Disclosure uploaded to Appraisal Correspondence
• Document Type = Final Cash-Out Disclosure uploaded to Appraisal Correspondence
Requirements for Type 1 non-VA to VA Refinance:
• At least one Net Tangible Benefit to the Veteran
• Document Type = Initial Cash-Out Disclosure uploaded to Appraisal Correspondence
• Document Type = Final Cash-Out Disclosure uploaded to Appraisal Correspondence
A Type 2 cash-out refinance occurs when the loan amount of the new loan is greater than 100
percent of the payoff amount of the loan being refinanced.
Requirements for Type 2 VA to VA Refinance:
Quick Reference Document for Cash-Out Refinances
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• Seasoning Certification
• At least one Net Tangible Benefit to the Veteran
• Document Type = Initial Cash-Out Disclosure uploaded to Appraisal Correspondence
• Document Type = Final Cash-Out Disclosure uploaded to Appraisal Correspondence
Requirements for Type 2 non-VA to VA Refinance:
• At least one Net Tangible Benefit to the Veteran
• Document Type = Initial Cash-Out Disclosure uploaded to Appraisal Correspondence
• Document Type = Final Cash-Out Disclosure uploaded to Appraisal Correspondence
All data for the new loan should be entered into the Loan Summary as usual. The inputs should
reflect what is in the final disclosure documents for the new loan. Where comparisons are made
with the loan being refinanced, the data will auto-fill and will not have to be entered twice.
Initial Disclosure of New Loan
The user is required to disclose data from the Initial Disclosure of the new loan on the Loan
Summary. The loan-to-value percentage and home equity will auto-calculate for the user in the
initial disclosure section. Although the data from the initial disclosure of the new loan is
displayed to the user in a comparison chart, the data from the initial disclosure is not used to
determine net tangible benefit(s).
Initial Disclosure of New Loan
Data Element
Data Definition
Loan Amount
Currency
- $1,234,567.89
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Type of Mortgage
Drop
-Down
Lender must select from one of the same options available in WebLGY:
0
- Regular Fixed
1
- GPM Never Exceed Reasonable Value
2
- GPM Other
3
- GEM
4
- TMP Buyout
5
- Hybrid ARM
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- ARM
Interest Rate
Numeric/Percentage
12.345%
Loan Term
Numeric/Month
- 3 digit
Monthly Principal, Interest
and PMI (if applicable)
Payment (Do not include
escrow for taxes, insurance
or HOA)
Currency
- $12,345.67
Total
payments the Veteran
will have paid after making
all remaining principal,
interest, and PMI (if
applicable) payments as
scheduled
Currency
- $1,234,567.89
Residual Income
Currency
- $12,345.67
Is this loan refinancing an
interim construction loan?
Checked = Yes
Quick Reference Document for Cash-Out Refinances
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If the loan being refinanced was a VA loan, then several of the data elements about the loan will
be auto populated in the Initial Disclosure section and the Final Disclosure section. The loan-to-
value percentage and home equity will auto-calculate. The user must manually enter other
required data. Requirements for manually entered fields are listed below.
Loan being refinanced (VA)
Data Element Data Definition
Interest Rate
If interest rate entered does not equal what is currently on record for the
LIN, the following question is asked of the user: ‘Was the loan modified
or was it an ARM loan?’ Yes/No (Default = Blank)
If Yes, the user is allowed to proceed.
If No, then the following error message will display to the user: "The
interest rate that you have entered does not match our records. Please
correct what you have entered or contact your local RLC for assistance."
The user will not be allowed to issue the guaranty.
Total payments the
Veteran will have paid
after making all
remaining principal,
interest, and PMI (if
applicable) payments as
scheduled
Currency - $1,234,567.89
Residual Income Currency - $12,345.67
If the loan being refinanced was a non-VA loan, data about the loan is required. The payoff
amount will auto populate. The loan-to-value percentage and home equity will auto-calculate
once the required data is entered for the calculation. Requirements for manually entered fields
are listed below.
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Loan being Refinanced (non-VA)
(All fields are required.)
Data Element
Data Definition
Type of Mortgage
Lender must select from one of the same options available in WebLGY:
0
- Regular Fixed
1
- GPM Never Exceed Reasonable Value
2
- GPM Other
3
- GEM
4
- TMP Buyout
5
- Hybrid ARM
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- ARM
Interest Rate
Numeric/Percentage
Loan Term
Numeric/Month
- 3 digit
Monthly Principal,
Interest and PMI (if
applicable)
Payment
(Do not
include escrow for
taxes, insurance or
HOA)
Manually entered:
Currency
- $12,345.67
Amount of PMI
included in Monthly
Payment
Value must be entered.
‘0’ indicates there is no PMI.
Total payments the
Veteran will have
paid after making all
Currency
- $1,234,567.89
Quick Reference Document for Cash-Out Refinances
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remaining principal,
interest, and PMI (if
applicable) payments
as scheduled
Residual Income
Currency
- $12,345.67
Is this loan
refinancing an interim
construction loan?
Checked = Yes
Comparison of Loan being Refinanced to New Loan
The net tangible benefit(s) to the Veteran are auto-determined based on the comparison of the
loan being refinanced to the new loan. At least one net tangible benefit must be met before the
guaranty will be issued.
VA to VA Refinance
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Non-VA to VA Refinance
Net Tangible Benefit Criteria
Net Tangible Benefit (NTB) Criteria
If 'PMI Included in Monthly Payment' = Yes (Checked) for the
non
-
VA loan being refinanced then the criteria is met. If no, criteria
is
not met. If loan being refinanced is a VA loan, the question does
not apply, so the criteria is not met.
Compares the loan term of the loan being refinanced to the loan
term of the refinancing new loan. If the loan term of the
refinancing new loan is less
than the loan term of the loan being
refinanced then the criteria is met.
Compares the
monthly P&I of the loan being refinanced to m
onthly
P&I of
refinancing new loan. If the monthly P&I of refinancing
the
new loan is less than the monthly P&I of the loan being
refinanced, then the criteria is met.
Quick Reference Document for Cash-Out Refinances
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Compare
s the interest rate of loan being refinanced to interest rate
of the
refinancing new loan. If interest rate of refinancing new lo
an
is less than interest rate on loan being refinanced, then the criteria
is met.
-to-
If
loan-to-value percentage of refinancing new loan is equal to or
less than 90
percent, then the criteria is met.
If 'Is this an interim construction loan?' = Yes on loan being
refinanced, then the criteria is met.
If residual income of refinancing new loan is more than the residual
income of
the loan being refinanced, criteria is met.
If
the type of m
ortgage loan being refinanced is not a fixed rate and
the
type of mortgage of the refinancing new loan is fixed, then the
criteria is met.
• 0 - Regular Fixed - Fixed
• 1 - GPM Never Exceed Reasonable Value - Adjustable
• 2 - GPM Other - Adjustable
• 3 - GEM - Adjustable
• 4 - TMP Buydown/Buyout- Adjustable
• 5 - Hybrid ARM - Adjustable
• 6 - ARM - Adjustable
Seasoning Certification
For all cash-out refinances paying off an existing VA loan seasoning certification is required.
The number of days from closing of loan being refinanced and loan closing of new loan will
auto-calculate and cannot be less than 210 (days) or the guaranty will not be issued.
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Recoupment Certification
For all Type 1 cash-out refinances paying off an existing VA loan the fee recoupment period is
required and it must be between 0 and 36 (months), or the guaranty will not be issued.
Note: The fee recoupment period must be between 0 and 36.
WARNING: In the case that the Issue Guaranty page is submitted and either no net tangible
benefit to the Veteran is found or no cash-out compliance documents have been uploaded to
appraisal correspondence, when the error message is returned to the user all data entered on the
page will be lost. The user will have to re-enter all of the data to issue the guaranty.