InfoBytes Blog
VA eliminates pre-approval process for certain loans
On May 19, the Department of Veterans Affairs (VA) issued Circular 26-22-09 to announce new procedures for loan approval and new procedures for processing joint loans. The Circular explains that, historically, the Department conducted a pre-closing review of loan application packages when the borrower had been rated unable to manage financial affairs and has a VA-appointed fiduciary. The Department also conducted a pre-closing review of cases where a loan would include more than one veteran using entitlement. In both cases, “the lender has sent such loan application packages to VA in advance of loan closing, and loan closing has not been able to proceed until after VA has issued approval.” The Circular noted that in an effort to streamline procedures to improve the veteran experience, the Department “has determined that such case-by-case reviews add a step that VA no longer believes necessary for ensuring program integrity.” The Circular also noted that that post-audit oversight would be as effective as a pre-closing review in maintaining program integrity, without the delays and additional administrative burdens that can be associated with the historical process. The Circular is effective immediately.