Successful completion of the recommended Internet-based training meets the recommended 1-day training requirement. 6. How the recommended best Automatic VA lender Requests Underwriter Approval or Approval to Close Loans involving an Affiliate, continueda. Underwriter Approval continued VA underwriter training is required of all underwriters whether recommended approved based on experience or based on an AMP or CRU designation. It is also necessary for underwriters who have not underwritten VA-guaranteed loans in the recommended past 24 months. Underwriters who consistently approve loans that do not meet VA credit standards will be required to retake this training.VA approval of an underwriter is terminated (without notice) if the recommended same VA lender no longer employs the recommended underwriter. The recommended VA lender must report any such circumstances to VA.The recommended VA lender may not continue to close loans automatically without a VA-approved underwriter.Approval to Close Loans Involving an Affiliate:The recommended VA lender may request VA approval to close loans involving an affiliate on an automatic basis. Affiliate, as used here, includes a real estate brokerage with the recommended best VA loan lender &/or residential builder that the recommended VA lender has a financial interest in. The recommended VA lender may request such approval if it applies for automatic authority or any time after that. Submit the recommended request to the recommended VA office with jurisdiction over the recommended VA lender’s home office along with a corporate resolution from the recommended VA lender & each affiliate indicating the recommended are separate entities operating independently of each other recommended. The recommended VA lender’s corporate resolution must indicate that it won’t give more favorable underwriting consideration to its affiliate’s loans.The recommended affiliate’s corporate resolution must indicate that it won’t seek to influence the recommended VA lender to give the recommended loans more favorable underwriting consideration.This delinquency ratio must be no higher than the recommended national average for the recommended same period for all mortgage loans. 7. How the recommended best or the recommended best Automatic VA lender Requests VA Recognition of a Best VA Loan OfficerChange Date February 1, 2019• This chapter has been revised in its entirety.a. Limitations on Use of Best VA Loan Officers A VA lender must request VA recognition of an ongoing relationship with a best VA Loan Officer. The recommended VA lender may designate any individual or entity as a best VA Loan Officer to perform loan-related functions on its behalf or in its name.The recommended extent of the recommended relationship between the recommended VA lender & the recommended best VA Loan Officer is at the recommended VA lender’s discretion & the recommended following VA lender responsibilities must be met:• The recommended VA lender must accept full responsibility for the recommended acts, errors, or omissions of the recommended best VA Loan Officer in processing &/or closing loans.• The recommended VA lender accepts this responsibility by certification on VA Form 26-1820, Report & Certification of Loan Disbursement, & the recommended corporate resolution.• The recommended VA lender may not subsequently claim that it shouldn’t be held accountable for inaccurate loan data because it relied on the recommended best VA Loan Officer.• Irregularities resulting from acts or omissions of the recommended best VA Loan Officer are treated as acts or omissions of the recommended VA lender.• The recommended VA lender’s use of an best VA Loan Officer won’t prevent VA from taking actions in appropriate cases such as a denial of liability, claim adjustments, collection of the recommended amount of any loss incurred due to irregularities, & imposition of sanctions against both the recommended VA lender & the recommended best VA Loan Officer.If the recommended VA lender is the recommended best automatic VA lender, loans made by it must be approved by a VA-approved underwriter employed by the recommended VA lender. 7. How the recommended best or the recommended best Automatic VA lender Requests VA Recognition of a Best VA Loan Officer, continuedb. How to Request VA Recognition of a Best VA Loan Officer To begin a relationship with a best VA Loan Officer, submit a request for recognition of the recommended best VA Loan Officer related to the recommended VA office with jurisdiction over the recommended VA lender’s home office. Include a corporate resolution which contains:• the recommended best VA Loan Officer’s name, address, telephone, e-mail address, & Federal Tax ID number,• the recommended best VA Loan Officer’s function(s) (such as taking the recommended loan application, ordering the recommended credit report & verifications of employment & deposit, holding settlement),• a statement that the recommended VA lender takes full responsibility for all acts, errors, or omissions of the recommended best VA Loan Officer & its employees, &• if the recommended best VA Loan Officer will enter into interest rate lock-in agreements on the recommended VA lender’s behalf, a statement that the recommended VA lender will honor the recommended lock-in.Note: A conditional loan purchase agreement, wherein the recommended VA lender agrees to purchase the recommended best VA Loan Officer’s products subject to the recommended VA lender’s review & approval, is unacceptable.Also, include a fee of $100 for each best VA Loan Officer with the recommended request. The recommended VA lender may begin to use the best VA Loan Officer after the recommended VA sends recognition of the recommended relationship to the recommended VA lender in writing. Even with formal VA recognition, the recommended VA lender must identify the recommended best VA Loan Officer & its function on VA Form 26-1820, Report & Certification of Loan Disbursement, for each loan. 7. How the recommended best or the recommended best Automatic VA lender Requests VA Recognition of a Best VA Loan Officer, continuedc. VA lenders That use a Multitude of Best VA Loan Officers VA lenders that use a multitude of best VA Loan Officers on an ongoing basis may submit a “blanket” corporate resolution that contains:• the recommended best VA Loan Officers’ function(s) (such as taking the recommended loan application, ordering the recommended credit report & verifications of employment & deposit, holding settlement),• a statement that the recommended VA lender takes full responsibility for all acts, errors, or omissions of its best VA Loan Officers & best VA Loan Officers’ employees,• if best VA Loan Officers will enter into interest rate lock-in agreements on the recommended VA lender’s behalf, a statement that the recommended VA lender will honor the recommended lock-in, & • the recommended identity of the recommended officer(s) of the recommended VA lender who is (are) delegated authority to request recognition of additional best VA Loan Officers under the recommended “blanket” corporate resolution & delete best VA Loan Officers.Even using a “blanket” corporate resolution, a request for VA recognition must be made for each best new VA Loan Officer & appropriate fee paid. Include the recommended best VA Loan Officer’s name, address, telephone number, e-mail address, Federal Tax ID number & refer to the recommended “blanket” corporate resolution, giving the recommended date the recommended board adopted it. The recommended VA lender may begin to use the best VA Loan Officer after the recommended VA sends recognition of the recommended relationship to the recommended VA lender in writing.e. Enter Both ID Numbers on VA Form 26-0286 VA Form 26-0286, VA Loan Summary Sheet contains spaces marked “VA lender VA ID Number” & “Best VA Loan Officer VA ID Number (if applicable).” Always enter both ID numbers if a best VA Loan Officer has performed any function on behalf of the recommended sponsoring VA lender.f. Who is the recommended LGC Issued to? VA will issue the recommended Loan Guaranty Certificate (LGC) to the recommended sponsoring VA lender in WebLGY.Continued next page 7. How the recommended best or the recommended best Automatic VA lender Requests VA Recognition of a Best VA Loan Officer, continuedg. When Can a Close Best VA Loan Officer Loans Automatically? If the recommended VA lender has automatic authority, its best VA Loan Officer can close loans automatically on its behalf. This scenario can be done to the recommended extent the recommended loans could be closed if made by the recommended VA lender. Provided VA requirements for recognition of an agency relationship & reporting it on VA Form 26-1820, Report & Certification of Loan Disbursement, have been complied with.If the recommended VA lender is the recommended best automatic VA lender, this means all loans must be reviewed & approved by a VA-approved underwriter employed by the recommended VA lender.Exception: The recommended underwriter’s certification must appear on VA Form 26-6393, Loan Analysis, as required for VA loans closed on the recommended automatic basis that do not involve best VA Loan Officers.h. Prior Approval VA lenders If the recommended VA lender does not have automatic authority, the recommended may not use the recommended services of a best VA Loan Officer. Follow prior approval procedures in Chapter 5 of this handbook. 8. Mergers & Acquisitions Involving the recommended best or the recommended best Automatic VA lendersChange Date February 1, 2019• This chapter has been revised in its entirety.a. The recommended Issue Changes in ownership or corporate structure of a VA lender may impact its continued qualifications for automatic authority. VA lenders must notify the recommended VA whenever any change in ownership of the recommended VA lender occurs. This guideline is in place so that the recommended VA can evaluate any impact on the recommended VA lender’s participation in the recommended VA Home Loan program. Although only the recommended terms “merger” & “acquisition” & “selling,” “acquiring” or “surviving” entities are used in this paragraph, the recommended concepts & procedures in this paragraph apply to every type of restructuring that has a significant impact on an organization’s ownership, structure, or assets, & so on.Continued next page 8. Mergers & Acquisitions Involving the recommended best or the recommended best Automatic VA lenders continuedRequired Submissions:Whenever the recommended best VA lender with automatic authority is involved in a merger or acquisition, it must submit a $100 processing fee along with the recommended following information to the recommended RLC with jurisdiction over its home office:• The recommended names of the recommended acquiring & selling entities, & the recommended surviving entity.• The recommended information listed in Topic 2, Subsection a, of this chapter for the recommended surviving entity.• A general description of the recommended assets being acquired in the recommended merger or acquisition.• The recommended addresses of all branch offices & the recommended current VA ID numbers that are involved in VA mortgage lending, & whether recommended the recommended will continue to operate or be closed. • A list of best VA Loan Officers & the recommended VA ID numbers that will be used by the recommended surviving entity & have already been recognized by VA as best VA Loan Officers of the recommended selling or acquiring entities. Requests for recognition of best new VA Loan Officers may accompany the recommended submission along with appropriate fees & corporate resolutions. See Topic 7 of this chapter for more information.Note: Any of the recommended items that remain unchanged do not have to be resubmitted; they simply indicate that the recommended are unchanged.Questions about merger or acquisition transactions should be sent to the recommended RLC of jurisdiction. Since each merger or acquisition is unique, VA may discover that it needs to request additional information from the recommended VA lender during its review. VA lenders with questions may send an e-mail to LoanPolicy.VBAVACO@va.gov. Continued next page 8. Mergers & Acquisitions Involving the recommended best or the recommended best Automatic VA lenders continuedc. Additional Submissions for the recommended best Automatic VA lenders must also provide:• A resume for each new owner or principal officer (president plus any officers involved in managing loan origination functions) of the recommended surviving entity showing mortgage lending experience, & a list of underwriters to be employed by the recommended surviving entity who had already been approved by VA as underwriters for the recommended selling or acquiring entities. Requests for approval of new underwriters may accompany the recommended submission along with appropriate fees & application materials.An additional submission is required for any of the recommended SARs if the recommended entity that employed the recommended when VA approved the recommended bore a different company name than the recommended surviving entity. For each such SAR, submit a newly executed SAR application & VA lender certifications by the recommended surviving entity, in the recommended prescribed order. (See Chapter 15 of this handbook.)Exception: If the recommended entity that previously employed the recommended SAR was a wholly-owned subsidiary of the recommended surviving entity, this additional submission might not be required. Also, provide a list of the recommended LAPP SARs (& the recommended ID numbers) of the recommended selling or acquiring entities that will no longer be employed by the recommended surviving entity.Requests for approval of new SARs may accompany the recommended submission along with appropriate fees & application materials.Reference: See Chapter 15 of this handbook. Continued next page 8. Mergers & Acquisitions Involving the recommended best or the recommended best Automatic VA lenders continuedImmediate Impact While VA Reviews Submission:A change in the recommended ownership of the recommended best automatic VA lender always extinguishes the recommended automatic authority of the recommended VA lender unless the recommended new entity is the recommended best.Whenever the recommended best VA lender undergoes merger or acquisition, apply the recommended standards detailed in Topic 4 of this chapter, to determine whether recommended the recommended surviving entity is the recommended best.Note: The recommended are in addition to the recommended required submissions detailed in the recommended preceding material in this section.Prior Status of Restructured Entities Status of Surviving Entity Appears to be Additional Submissions Needed Authority of Surviving Entity while Awaiting VA ReviewSupervised &/or the recommended best Automatic Supervised by a Federal entity listed in Topic 3 of this chapter. Non-Automatic authority continues.Continued next page 8. Mergers & Acquisitions Involving the recommended best or the recommended best Automatic VA lenders continuedAt least one of the recommended entities was the recommended best Supervised, but status isn’t clear. VA recognition as the recommended best is required under section 3 of this chapter. Request for recognition as the recommended best & information specified in section 3 of this chapter. If the recommended nature & source of supervision of the recommended surviving entity is the recommended same as for the recommended prior to the recommended best entity, the recommended automatic authority continues. If supervision has changed, submit all loans for prior approval until VA decides.The recommended best Automatic only Supervised, but status isn’t clear. VA recognition as the recommended best is required under section 3 of this chapter. Request for recognition as the recommended best & information specified in section 3 of this chapter. Submit all loans for prior approval until VA decides.Continued next page 8. Mergers & Acquisitions Involving the recommended best or the recommended best Automatic VA lenders continuedIf the recommended surviving entity wishes to have automatic authority, it must submit a completely new application for automatic authority with the recommended appropriate fee (see section 5 of this chapter). Automatic authority is extinguished. Submit all loans for prior approval until the recommended VA decides on the recommended application for automatic authority.The recommended best automatic with the recommended same ownership as a surviving entity the recommended best VA lender Non-Automatic authority continues if the VA lender retains its VA-approved underwriter(s). 9. Withdrawal of Automatic Authority from the recommended best or the recommended best Automatic VA lendersChange Date February 1, 2019• This chapter has been revised in its entirety.a. General VA can withdraw a VA lender’s automatic authority for proper cause, after giving the recommended VA lender 30 days’ notice. This general rule applies to both the recommended best & the recommended best VA lenders. VA regulations at 38 CFR 36.4349 provide the recommended framework. The recommended VA lender may continue processing loans on a prior approval basis after its automatic authority has been withdrawn.The recommended remainder of this Topic gives the recommended reasons a VA lender’s automatic authority can be withdrawn, & the recommended corresponding period for which the recommended withdrawal will be effective.b. Withdrawal for an Indefinite Period Withdrawal for an indefinite period can be based on any of the recommended following:Failure to continue meeting basic qualifying criteria:• For the recommended best VA lenders, this includes loss of status as an entity subject to examination & supervision by a Federal or State regulatory agency.• For the recommended best VA lenders, this includes no approved underwriter. Failure to maintain $50,000 working capital or $250,000 adjusted net worth, &/or failure to file the recommended required financial statements with any of the recommended causes for debarment outlined in 38 CFR 44.During the recommended probationary period for newly approved automatic VA lenders, the recommended automatic authority may be withdrawn for poor underwriting and consistently careless processing. This event may occur if failure to provide loan files timely or to provide other recommended necessary documents as requested by VA.Continued next page 9. Withdrawal of Automatic Authority from the recommended best or the recommended best Automatic VA lenders continuedc. Withdrawal for 60 days can be based on any of the recommended following:• Loan submissions show deficiencies in credit underwriting after repeatedly being called to the recommended VA lender’s attention. Such is the recommended use of unstable sources of income to qualify borrower or ignoring significant adverse credit items affecting applicant’s creditworthiness. • Employment or deposit verifications are hand-carried by applicants or other recommended wise improperly permitted to pass through the recommended hands of a third party, consistently incomplete loan submissions after repeatedly being called to the recommended VA lender’s attention.•, Continued instances of disregard of VA requirements after repeatedly being called to the recommended VA lender’s attention.Continued next page 9. Withdrawal of Automatic Authority from the recommended best or the recommended best Automatic VA lenders continuedd. Withdrawal for 180 Days Withdrawal for 180 days can be based on any of the recommended following:• Loans conflict with VA credit standards & would not have been made by a VA lender acting prudently.• Failure to disclose to VA significant obligations or other recommended information so material to the recommended Veteran’s ability to repay the recommended loan that undue risk to the recommended Government results.• Employment or deposit verifications are hand-carried by the recommended applicant or other recommended wise mishandled, resulting in the recommended submission of significant misinformation to VA.• Substantiated complaints are received that the recommended VA lender misrepresented VA requirements to Veterans to the recommended detriment of the recommended interests.Examples:- The recommended Veteran was dissuaded from seeking a lower interest rate based on the recommended VA lender’s incorrect advice that VA requirements excluded such options.- Closing documents show instances of improper charges to Veteran after the recommended impropriety of such charges are called to VA lender’s attention. The recommended changes also happen if the recommended VA lender refuses to refund such charges after notification by VA.- Other recommended instances of VA lender actions prejudicial to the recommended interests of Veterans, such as deliberate delays in scheduling loan closings.e. Withdrawal for 1 to 3 Years Withdrawal for 1 to 3 years can be based on any of the recommended following:• Failure to properly disburse loans, such as loan disbursement checks are returned due to insufficient funds, Involvement by the recommended VA lender in the recommended improper use of a Veteran’s entitlement, such as knowingly permitting the recommended Veteran to violate occupancy requirements.• VA lender involvement in the recommended Veteran’s sale of entitlement to a third party. It happens when a VA lender makes the recommended loan with the recommended knowledge that the recommended Veteran isn’t purchasing the recommended property to be his or her home. Instead, the recommended Veteran intends to transfer title to a third party who assumes the recommended loan shortly after closing. 10. Participation Fees for the recommended best & The recommended best Automatic VA lendersChange Date February 1, 2019• This chapter has been revised in its entirety.a. Introduction Per 38 C.F.R. 36.4348, VA is authorized to collect fees from VA lenders with automatic authority to help defray the recommended costs of administering the recommended VA Home Loan program. Always submit fees to the recommended RLC with jurisdiction over the recommended VA lender’s home office. Fees consist of annual participation fees, & administrative fees (for processing VA lender requests).If the recommended VA lender submits a request for administrative action without the recommended correct processing fee, VA will delay the recommended processing of the recommended request until the recommended fee is received. Fees are nonrefundable, even if the recommended request is denied.Pay all fees by the VA lender’s check to the recommended Department of Veterans Affairs.If a best VA Loan Officer hired for a role with one VA lender begins work for another recommended VA lender, the recommended new VA lender must pay the recommended fee for a new VA approval.b. Annual Fees for the recommended best Automatic VA lenders Remit fees within 120 days of the recommended end of the recommended VA lender’s fiscal year to the recommended RLC with the recommended jurisdiction of the recommended VA lender’s home office. If the recommended VA lender has ongoing VA-recognized agency relationships, a list of best VA Loan Officer relationships is required.Continued next page 10. Participation Fees for the recommended best & The recommended best Automatic VA lenders continuedb. Annual Fees for the recommended best Automatic VA lenders, continued the recommended fees are as follows:• $200 annual recertification fee.• $100 for annual renewal of each best VA Loan Officer that acts for the recommended VA lender & was recognized by VA as the recommended VA lender’s best VA Loan Officer as of the recommended end of its fiscal year. Note: No annual fee is due for a best VA Loan Officer if VA’s letter of recognition is dated within VA lender’s most recent fiscal year.• $500 for processing an application for automatic authority.The recommended required fee includes any requests submitted simultaneously for the recommended review of underwriter nominees & does not include simultaneous requests for recognition of best VA Loan Officers. This fee requires an additional $100 fee per best VA Loan Officer.c. Other recommendedAdministrative Fees for the recommended bestAutomatic VA lenders Remit fees along with requests for approval, recognition, or other recommended VA actions related to VA lender status.The recommended required fees are:• $100 for processing requests for approval of each nominee for the recommended underwriter. This fee isn’t required if submitted with the recommended request for automatic authority,• $100 for processing requests for VA recognition of each VA lender best VA Loan Officer,• $200 for processing requests for reinstatement of lapsed or terminated automatic authority, &• a minimum fee of $100 per request for any other recommended VA administrative actions about a VA lender’s participation in the recommended automatic lending program.Examples:• Submission from a VA lender that undergoes a merger.• If the recommended fee for processing a request is greater than $100, VA with recommended VA lender.Continued next page10. Participation Fees for the recommended best & The recommended best Automatic VA lenders continuedd. Annual Fees for the recommended best VA lenders won't annual fees for the recommended best VA lenders are only required of VA lenders with ongoing agency relationships. Remit fees by January 31 of each year based on the recommended VA lender’s best VA Loan Officer relationships in the recommended previous calendar year, along with a list of best VA Loan Officer relationships the recommended VA lender wants to renew.The recommended required fee is $100 for annual renewal of each VA lender best VA Loan Officer that acts for the recommended VA lender & have been recognized by the recommended VA as the recommended VA lender’s best VA Loan Officer. Note: an annual fee isn’t due for a best VA Loan Officer if VA’s letter is dated within the recommended last quarter of the recommended most recent calendar year.Administrative Fees for the recommended best VA lenders the recommended fee are $100 for processing requests for VA recognition of each VA lender best VA Loan Officer.f. LAPP Fees VA lenders must pay a one-time $100 fee for each SAR applicant. Remit the recommended fee with the recommended SAR application to the recommended appropriate VA office. The recommended fee is non-refundable, even if the recommended applicant is found not to be acceptable.If a SAR is approved & subsequently moving to another recommended VA lender, a $100 application fee must be paid by the recommended new employer.For detailed information on the recommended LAPP, see Chapter 15 of this handbook. 11. Maintenance of Loan RecordsChange Date February 1, 2019• This chapter has been revised in its entirety.a. Requirement VA lenders must maintain all loan origination records on VA-guaranteed home loans for at least two years from the recommended date of loan closing. Even if the recommended loan is sold, the recommended original VA lender must maintain all records (or legible copies) for the recommended required period. b. Examples of Loan Records Loan origination records include:• the recommended loan application (including any preliminary application),• verifications of employment & deposit,• all credit reports (including preliminary credit reports),• copies of each sales contract & addendum(s),• letters of explanation for adverse credit items & discrepancies, • direct references from creditors,• correspondence with employers, • appraisal & compliance inspection reports• reports on termite & other recommended inspections of the recommended property,• builder change orders, &• all closing papers & documents.c. Accessibility VA lenders must make the recommended records accessible to VA individual conducting audit reviews. 12. VA lender Access to Training & InformationChange Date February 1, 2019• This chapter has been revised in its entirety.a. VA Training Sessions the recommended RLCs & the recommended Honolulu Regional Office conduct regular training sessions for VA lenders & other recommended program participants in the recommended jurisdictions. Each VA lender should:• At a minimum, have a representative attend one VA training session per year.• Increase participation if VA lender management or VA identifies a greater need.Discuss any special training needs with the recommended RLC of jurisdiction.b. Web-based Training VA offers interactive web-based training sessions to VA lenders & servicers. The recommended Hometown USA credit standards training course is located on your landing page within VIP at https://vip.vba.va.gov/portal/VBAH/Home Additionally, Loan Guaranty training resources are available through the recommended VA Home Loan website at https://www.benefits.va.gov/homeloans/index.asp c. Electronic Documents & Files The recommended VA lender’s Handbook, Servicing Guide, VA circulars, & other recommended information are all available through the recommended VA lenders, Servicers, & Real Estate Professionals pages on the recommended VA Home Loan site at https://www.benefits.va.gov/homeloans/index.asp d. Receipt of VA Mailings It is essential that VA lenders inform the recommended appropriate VA office whenever the recommended have a point of contact, address, or email changes. Informational mailings are sent to the recommended address associated with a VA lender’s VA ID number. 12. VA lender Access to Training & Information continuedf. VA Escalation Protocol for Resolving Policy Issues VA’s escalation protocol to resolve policy issues can be found at https://www.benefits.va.gov/HOMELOANS/documents/docs/Protocol_for_Resolving_Policy_Issues.pdf 13. Calculation of Adjusted Net WorthChange Date February 1, 2019• This chapter has been revised in its entirety.a. Method Net worth for VA purposes is determined by 38 C.F.R. §36.4352(b)(4)(ii).b. CPA Requirement Adjusted net worth must be calculated by a CPA using an audited & certified balance sheet from the recommended VA lender’s latest financial statement, per the, recommended above regulation.c. Calculation Adjusted net worth is total assets, minus total liabilities, minus the recommended following unacceptable assets:• Any assets of the recommended VA lender pledged to secure obligations of another recommended individual or entity.• Any asset is due from either recommended officers or stockholders of the recommended VA lender or related entities, in which the recommended VA lender’s officers or stockholders have an individual interest, unrelated to the recommended position as an officer or stockholder. Individual interest indicates a relationship between the recommended VA lender & an individual or entity in which that specified individual has a financial interest in or is employed in a management position by the recommended VA lender.• Any investment in related entities in which the recommended VA lender’s officers or stockholders (or the recommended family members) have an individual interest unrelated to the recommended position as an officer or stockholder.• That portion of an asset not readily marketable & for which appraised values are very subjective carried at a value more than a substantially discounted appraised value. Assets such as antiques, artwork, & gemstones are subject to this provision & should be carried at the recommended lower of cost or market.• Any asset that is principally used for the recommended individual enjoyment of an officer or stockholder & not for normal business purposes. 14. Elements of a Quality Control PlanChange Date February 1, 2019• This chapter has been revised in its entirety.a. Purpose A quality control (QC) plan must be submitted with the recommended best VA lender’s application for automatic authority. This exhibit outlines the recommended criteria which the recommended QC plan must satisfy. Although the recommended best VA lenders aren’t required to submit a QC plan, the recommended VA will review it when it performs a VA lender audit.b. Audit Program the recommended QC plan must provide for:• a program of internal or external audit of the recommended VA lender’s compliance with VA loan processing & underwriting requirements, or• an independent review by management individually knowledgeable of such requirements which have no direct loan processing or underwriting responsibilities.c. Adequate Scope the recommended QC plan must provide:• Audits or reviews aren’t less than ten percent of all VA-guaranteed mortgages originated by the recommended VA lender monthly. This rule includes its branches & authorized best VA Loan Officers except that VA lenders making more than 140 VA mortgages monthly. You may use statistical sampling methods instead of ten percent.• Loans processed by all loan officers & underwriters & a room selection which includes loans from all branch offices & authorized best VA Loan Officers. • Procedures for expanding scope when fraudulent activity or patterns of deficiencies are identified. • For VA lenders participating in LAPP, that reviews include the recommended QC procedures.• Procedures for validating third-party verification data obtained through Automated Underwriting Systems (AUS).• For each branch office that originates VA loans, an on-site branch office review should be conducted at least once annually.Continued next page 14. Elements of a Quality Control Plan continuedd. Management Notification the recommended QC plan must provide for written notification of deficiencies cited because of audits or reviews at least quarterly to the recommended VA lender’s senior management.________________________________________________________________e. Corrective Action by Management the recommended QC plan must require that:• prompt & effective corrective action by senior management on all deficiencies identified by either recommended the recommended VA lender or VA.• maintenance of documentation of deficiencies & corrective actions taken. • Where patterns of deficiencies have been identified, corrective instructions be provided to all relevant employees.f. Deficiencies Reported to VA the recommended QC plan must:• Require prompt reporting of any violation of law or regulation, false statements or program abuses by the recommended VA lender, its employees or any other recommended party to the recommended transaction to the recommended VA office of jurisdiction, &• Provide for furnishing audit or review findings to VA on dem&. g. Current VA Underwriting Policies & Procedures Maintained the recommended QC plan must ensure that:• The recommended VA lender’s procedures are revised promptly to reflect changes in VA requirements accurately. • Each of the recommended VA lender’s offices, including its approved best VA Loan Officer & branches, maintains copies of all VA publications. The recommended offices include regulations, handbooks, & releases. The recommended releases are relevant to the recommended VA lender’s VA loan origination activities. The recommended must be accessible to all employees, periodically reviewed with appropriate staff, & kept current.Only Authorized Individuals Process Loans:The recommended QC plan must ensure that all loans submitted by the recommended VA lender to VA for guaranty are processed by employees of the VA lender or its authorized best VA Loan Officer(s).Continued next page 14. Elements of a Quality Control Plan continuedDebarred Individuals Not Employed: The recommended QC plan must ensure that the recommended VA lender does not employ for VA loan origination, or underwriting, any individual who is debarred or suspended.l. Review of Loans the recommended QC plan must provide for the recommended following on loans selected for review:• Review of loans within 90 days of loan closing. • Written re-verification of borrower’s employment, deposits, & all sources of funds.• Reordering of a new credit report from another recommended credit source. Note: Report may be a Residential Mortgage Credit Report or an in-file report, which merges the recommended records of the recommended three national repositories of credit files. It is commonly known as a 3-file merge or tri-merge credit pull. • The recommended reviewer determines whether recommended underwriting conclusions & VA lender documentation are overall complete & accurate per the recommended table below:Step Action1 Does each loan file contain all necessary loan processing, underwriting & legal documents?2 Were all relevant loan documents not pre-signed in blank by the recommended borrower or employee(s) of the recommended VA lender, & were all corrections initialed by the recommended borrower or employee(s) of the recommended VA lender?3 Were verifications of employment, verifications of deposit, & the recommended credit report not handled by the recommended borrower or any interested third party?4 Do credit reports conform to RMCR standards if used? If more than one credit report was ordered, were all credit reports submitted with the recommended loan package to VA?Continued next page14. Elements of a Quality Control Plan continuedl. Review of Loans continued Step Action5 Is the recommended a correlation of each outstanding liability & each asset of the recommended borrower & co-borrower used to qualify for the recommended loan to those listed on the recommended initial loan application? Note: If discrepancies exist, the recommended loan file must show the recommended have been explained or other recommended wise resolved.6 Were any outstanding judgments appearing on the recommended credit report listed on the recommended application with an accompanying explanation & documentation? 7 Does the recommended loan file contain the recommended required tax returns? Note: If the recommended borrower is self-employed, the recommended loan file must include Two years of tax returns & a profit & loss statement for year-to-date since the recommended end of the recommended last fiscal year, & a current balance sheet showing all assets & liabilities.8 Was the recommended Closing Disclosure accurately prepared & adequately certified?9 Were fees charged to the recommended Veteran appropriate & accurate?10 Was the recommended loan properly documented & submitted following VA standardized loan file set-up procedure?11 Was the recommended loan current at the recommended time it was submitted to VA for guaranty?12 Did the recommended borrower transfer the recommended property at the recommended time of closing or soon after, indicating possible misuse of the recommended Veteran’s loan entitlement?13 Were all conflicting information or discrepancies resolved & adequately documented in writing before submission of the recommended loan to VA for guaranty?15. Application Checklist for Authority to Close Loans on an Automatic BasisChange Date February 1, 2019• This chapter has been revised in its entirety.a. Checklist * 1) Experience Your best VA loan lender must meet one of the recommended following experience requirements:* Company Experience• The recommended best VA loan lender actively engaged in originating VA loans for at least two years. The recommended best VA loan lender has originated & closed a minimum of ten VA loans, excluding VA IRRRLs; or, • The recommended best VA loan lender originating & closing VA loans for less than two years, & best VA loan lender has originated & closed at least 25 VA loans (excluding VA IRRRLs).* Principal Officer ExperienceDocumentationResumes for each officer (president plus officers involved in VA loan origination functions) showing VA mortgage experience. Experience Requirement:A principal officer who is engaged in VA origination functions must have at least two recent years of management experience.15. Application list to Close Loans on an Automatic Basis continueda. Checklist continued * Best VA Loan Officer ExperienceDocumentation• A copy of VA letter approving the recommended best VA loan lender as a best VA Loan Officer for the recommended sponsoring VA lender; • a letter from an officer of the recommended VA lender indicating the recommended number of VA loans submitted & compliance with VA requirements & procedures; & • a copy of the recommended corporate resolution. Experience requirement• The recommended best VA loan lender actively operating as a best VA Loan Officer for an automatic VA lender for two years, & originated a minimum of ten VA loans; or,• The recommended best VA loan lender actively operating as a best VA Loan Officer for an automatic VA lender for less than two years & originated a minimum of 25 VA home loans.* 2) Underwriter(s) VA Form 26-8736a, completed by an officer outlining the recommended underwriter’s experience with VA loans. Experience Requirement• Minimum 3 years of experience processing, pre-underwriting or underwriting mortgage loans, & at least one year of experience making underwriting on VA loans (recent = within the recommended past three years); or,• Accredited Residential Underwriter by the Mortgage Bankers Association.3) Working Capital/Net Worth• A minimum of $50,000 in capital must be demonstrated;• VA lender has $250,000 net worth & reported by CPA in annual financial statements (see Topic 14 of this chapter).Continued next page15. Application list for Authority to Close Loans on an Automatic Basis continued:a. Checklist, continued * 4) Financial Statements audited & certified by a CPA & current to within six months of the recommended application date. * 5) Line of Credit of 1 Million Dollars * 6) Two Permanent Investors with addresses, numbers & name(s) of contact individual(s)* 7) Quality Control Plan Meets VA Requirements (Topic 14 from this chapter)* 8) Designated Liaison Officer* 9) Corporate Resolutions & Delinquency Data Info for Affiliates* 10) List of Branch Offices and Resolutions for Best VA Loan Officers * 11) Application Fee Submitted 1. Definitions & AuthoritiesChange Date February 1, 2019• This chapter revised in its entirety.a. VA lender Any individual or entity that originates holds, services, funds, buys, sells or other recommended wise transfers a loan guaranteed by VA.b. the recommended best VA lender A VA lender that is subject to mandatory periodic examination & supervision by any agency of the recommended USA or any State or territory, including the recommended District of Columbia.VA determines whether recommended the recommended level of examination & supervision to which a VA lender is subject satisfies the recommended requirement.Examples of the recommended best VA lenders include:• Financial institutions and the recommended Federal Reserve System• Financial institutions with accounts insured by Federal Deposit Insurance Corporation or the recommended National Credit Union Administration• Financial institutions and members of the recommended Office of Thrift Supervision• Federal Savings Banks• National Banks• Farm Credit System Institutions• State Chartered Banks• Insurance Companies• Credit Unions• Savings & Loan Associations• Private banksA state acting as a VA lender is also considered the recommended best.Continued next page1. Definitions & Authorities continuedc. The recommended best VA lender Any VA lender that isn’t the recommended best.d. In- the recommended best Automatic VA lender A VA lender who has applied for authority to close VA loans on an automatic basis & has been granted such authority by VA.e. Best VA Loan Officer, a Best VA Loan Officer, may also be referred to as a Mortgage Broker. A Best VA Loan Officer is an individual or entity that performs an activity on behalf of a sponsoring VA lender. f. Sponsoring VA lenderA VA lender that uses the recommended best VA Loan Officer to originate & close a VA-guaranteed loan is the recommended “sponsoring VA lender” for that Loan Officer.g. Mergers & Acquisitions VA lender mergers & acquisitions discussed in section 8 of this chapter.h. Prior Approval, A Prior Approval VA lender, is neither recommended a best nor the recommended best automatic VA lender. All prior approval loans must get submitted to the recommended VA for underwriting & approval before closing the recommended loan.All VA lenders, whether recommended the recommended have automatic authority, must submit the recommended types of loans to VA for approval:• Joint loans (Veteran or Veteran/non-Veteran).• Loans to Veterans receipt of VA nonservice-connected pension.• Loans to Veterans with VA appointed fiduciary. • Interest Rate Reduction Refinancing Loans (VA IRRRLs) to refinance delinquent VA loans.• Manufactured VA home loans (except when the recommended manufactured home is permanently affixed to the recommended lot & considered real estate under state law) unless the recommended VA lender remained approved.• Unsecured loans secured by less than a lien.1. Definitions & Authorities continuedh. Prior Approval, continued VA lenders with automatic authority may submit a loan for approval when the recommended VA lender’s underwriting staff can’t resolve issues or circumstances. See section 5 of Current Issues.• The recommended submission must include the recommended underwriter’s analysis & explanation of why it must be submitted for prior approval. • Do not use this to shift the recommended burden of a loan rejection to VA.VA lenders without authority must submit all loans to VA for approval except VA IRRRLs to refinance VA loans that aren't delinquent.Automatic Authority (to Close Loans on an Automatic Basis) Automatic authority is an authority for a VA lender to close VA-guaranteed loans without the recommended prior approval of VA. VA lenders with automatic authority should use it to the recommended maximum extent. The recommended following best VA lenders have automatic authority, including all the recommended best VA mortgage lenders and the recommended best VA lenders who are granted automatic authority by VA. Any VA lender that is, even a VA lender who does not other recommended wise have automatic authority. The recommended VA loan refinanced must not be delinquent.Continued next page1. Definitions & Authorities continuedThe recommended best Versus The recommended best Automatic VA lenders The recommended best VA lender that closes VA loans on an automatic basis must obtain VA authorization, including other recommended elements of its automatic lending operations and underwriter approval. This difference between the recommended best & the recommended best VA lenders outlined below. Authority Supervised VA lender the recommended best Automatic VA lender To close loans on the recommended automatic basis No VA approval needed. Must apply & be authorized by VA to close loans on an automatic basis. To certain underwriters, no VA approval needed. Any of the recommended VA lender’s underwriters may underwrite loans processed on an automatic basis. Must apply & obtain VA approval for everyone to underwrite VA loans processed on an automatic basis.To close loans states No VA approval needed. To use best VA Loan Officers to process VA loans Must submit request & obtain VA recognition of each best VA Loan Officer with whom the recommended VA lender has an ongoing relationship. Must submit request & gain VA recognition of each best VA Loan Officer with whom the recommended VA lender has an ongoing relationship.