Deciphering the VA Lender’s Handbook Chapter 1 Part 3
After the lender has submitted their paperwork to the VA to be considered to become a VA-approved lender, the VA office that has jurisdiction over the area in which the lender’s main office resides will provide pertinent information to the lender. The things that the VA will provide will include a VA Poster 26-77-2, which sounds odd, but is a poster that classifies the lender as an Equal Opportunity Lender, which is a requirement for VA approval. The local VA office will also offer training on VA loan processing and a VA ID number that the lender can use for any and all VA lending transactions and documents to identify themselves to the VA. The newly-approved lender should also download a copy of the Lender’s Handbook, and they are given a link to the online version.
Next, the local VA office will put the lender on the appropriate mailing lists so that they can receive any future VA publications, which include modifications to the Lender’s Handbook, updates on policy changes, and any special notifications that cover unique or temporary circumstances, such as a natural disaster in a certain area. Areas that are not affected by the disaster will likely not receive any instructions regarding it. From this point on, the regional VA office that has provided the new lender with these things will become the primary point of contact between the lender and the VA. Any questions, concerns, training requests, or any other requests or issues should be brought up with the regional office first. This is important for the borrower to understand because there are often delays when the regional office doesn’t know the answer to the question the lender is asking. This is not the lender’s fault. Borrowers can get frustrated with any delays to getting their VA loan, but they should know that the lender is required to first go through the regional VA office before going higher up.
The VA allows that as soon as the lender is familiar enough with the VA loan program to begin making VA loans without violating any of the laws, regulations, and procedures, they may begin to do so. At this point, the process becomes different for supervised and nonsupervised lenders. For a nonsupervised lender, they will need to submit every single loan they wish to close on to the VA for prior approval first. If they wish to have automatic authority, they will need to go through the application process. For supervised lenders, they can immediately begin making and closing on VA loans without prior approval unless it is one of the loan types mentioned in Chapter 1 Part 1 of this series.
The list is as follows:
- The Board of Governors of the Federal Reserve System
- The Federal Deposit Insurance Corporation
- The Comptroller of the Currency
- The Office of Thrift Supervision
- The National Credit Union Administration
- The Farm Credit Administration
If a lender is supervised by any of those agencies, then they need not submit the majority of VA loans to the VA for prior approval. The lender indicates which (if any) of the agencies they are supervised by in the initial application process. While there may be some additional documentation required, it is handled on a case by case basis.
Interestingly, the VA recognizes the supervision of the states of Illinois or New Jersey also as sufficient supervision. However, the supervision of these states only applies to offices and loans inside those states. For a lender that is supervised by either of these states, they are asked for certain information during the initial application process. Illinois lenders need a copy of their state license from the Office of Banks and Real Estate. New Jersey lenders need to provide a copy of their license from the New Jersey Department of Banking and Insurance. The Handbook does not list any other states that can count as supervisory entities.