Change Date

September 15, 2004, Change 4

·   This section has been changed to create subsection lettering.

·   Subsection e has been changed to spell out the acronym for Electronic Data interchange (EDI). 

a. Protection Against Loss

VA guarantees a portion of the loan, identified on the VA Loan Guaranty Certificate (LGC) by percentage and dollar amount.  If a loss ultimately occurs on the loan, VA will reimburse the loan holder for all or part of such loss

·   limited by the stated percentage and dollar amount of the guaranty

·   limited by any VA maximums for reasonable and customary foreclosure expenses, and

·   subject to the lender’s compliance with applicable law and regulations.

b. Lender Responsibility

It is the lender’s responsibility to comply with all laws and regulations related to the VA loan guaranty program, and thereby prevent VA’s denial or reduction of a payment on a future claim.  A lender can accomplish this by ensuring that its employees who perform work related to VA lending

·   understand and comply with VA policies, procedures and regulations, and applicable law, and

·   direct questions to VA when issues arise that are not addressed in this handbook or other materials provided by VA.

c. When is a Loan  that was Closed Automatically Guaranteed?

A loan is automatically guaranteed by VA upon closing (prior to issuance of the LGC) provided the loan was made by either

·   a supervised or a nonsupervised lender with automatic authority, and

·   the lender complied with applicable law and regulations.

d. When is a Prior Approval Loan Guaranteed?

A prior approval loan is also guaranteed by VA upon closing (prior to issuance of the LGC) provided

·   the closed loan matches the proposed loan upon which the Certificate of Commitment was based, and

·   the lender complied with applicable law and regulations.