VA adopted rules amending requirements with respect to “cash-out” refinance loans. The adopted rules implement section 309 of the Economic Growth, Regulatory Relief and Consumer Protection Act. Under the adopted rules, cash-out refinance loans are now split into 2 categories, Type I Cash-outs and Type II Cash-Outs. Type I Cash-Outs are cash-out refinance loans where the amount of the principal for the new loan is less than or equal to the payoff amount on the refinanced loan. Type II Cash-Outs are cash-out refinance loans where the amount of the principal for the new loan is greater than the payoff amount of the refinanced loan. In addition, the adopted rules: define the parameters as to when VA will permit cash-out refinance loans; outline the common characteristics required for the guaranty or insurance of Type I and Type II Cash-Outs; and set forth net tangible benefit, recoupment and seasoning requirements. The adopted rules pertain to all cash-out refinance loans. This includes refinancing of construction loans (construction-to-permanent loans), regardless of whether there is a change in the principal loan amount. The adopted rules become effective February 15, 2019.
Click Here to View the VA Circular 26-18-29
Click Here to View the VA Circular 26-18-30
Click Here to View the VA Rule Adoption – Revised Cash-Out Refinance Requirements
