l. Underwriting of IRRRLs When Obligors Have Changed (continued)

The lender should satisfy itself that the lower payment and interest rate and the minimum 25 percent guaranty compensate for no re-underwriting on the new loan when there has been a change in obligors.

m. Occupancy

For IRRRLs, the veteran or the spouse of an active service member must certify that he or she previously occupied the property as his or her home.  This is different than the requirement for non-IRRRL VA loans that the veteran must intend to personally occupy the property as his or her home.   

Reference:  See Chapter 3 for details.

n. VA Loan Identification Number

Request a new loan number for each IRRRL through The Appraisal System (TAS), without requesting an appraisal.

o. Credit Underwriting

No credit information or underwriting is required unless

·  The loan to be refinanced is 30 days or more past due (see section 2 of this chapter) or

·  the monthly payment (PITI) will increase 20 percent or more.

Reference:  See subsection d of this section.

A borrower with a recent Chapter 13 bankruptcy may need approval of the trustee for the new loan.

p. Prior Approval Procedures

An IRRRL can be closed on an automatic basis by any lender (such as, a lender with or without automatic authority to close other types of loans on an automatic basis) in any geographic location. 

Exception:  For IRRRLs to refinance existing VA loans 30 days or more past due, VA prior approval is needed (see section 2, subsection a of this chapter).