b. Amount of Entitlement (continued)

If the COE shows available entitlement equal to the maximum in effect on the date the COE was issued or last updated, there is no need to have the COE updated to reflect the current maximum.

The lender can assume the veteran now has $36,000 available.

If, however, the veteran previously used entitlement which has not been restored, available entitlement is reduced by the amount used on the prior loan(s).  The lender has two options in this situation:

14.                ·   Make the loan knowing that VA’s guaranty is limited to the amount of available entitlement, or

15.                ·   Have the veteran apply for restoration of previously used entitlement.

16.        

Reference:  Section 6 of this chapter for an explanation of how to apply for restoration and under what circumstances it may be granted.

Note:  The additional entitlement of up to $24,000 may be used for certain loans above $144,000 even if the veteran has no entitlement or partial entitlement. However, in such cases the lack of full entitlement will likely result in lenders receiving less than a 25 percent guaranty from VA.  It is the lender’s responsibility to ensure they are able to sell their loan on the secondary market.