VA IRRRL Processing- Another Potential “Money-Maker”

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

Last week I discussed my appreciation for the ease of processing FHA streamline refinances. This week I want to give props to the VA IRRRL as they are equally as pleasant to process.

VA IRRRL stands for Interest Rate Reduction Refinancing Loan. Some also refer to it “VA streamline refinance.” But whichever you call it, these files are very simple to process, have minimal veteran qualification requirements and can be processed and closed in a relatively short time frame.

For processing, I like to use the VA IRRRL Processing Checklist I created some years back. The checklist helps to remind of all of the items needed for a standard IRRRL.

To learn the basics of IRRRL requirements, I always refer originators and processors to the following resources:

· VA’s IRRRL Facts for Veterans
· VA Lenders Handbook- Chapter 6, Refinancing Loans
· VA 26-8923 IRRRL Worksheet

Essentially, the main requirement for an IRRRL is that the interest rate be going down with the refinance (except in the case of an ARM to a fixed rate where the interest rate may be allowed to increase under certain circumstances). VA does not require the borrower’s employment, income, assets or any liability aside from the VA mortgage be listed on the 1003. No appraisal is required and something worth noting is that VA doesn’t even require the property be the primary residence of the veteran. If the veteran has moved from the property since occupying it at the time of purchase whereas now it’s an investment property or second home, it is still eligible for a VA IRRRL.

Though VA makes these loan guidelines very simple, some lenders do choose to add their own loan requirements so it is very important to consult the lenders underwriting guidelines and/or product matrixes with each IRRRL. I knew of one lender in the past that was requiring a drive-by appraisal for VA IRRRLs so I’m sure you may find other lender-specific guideline variances out there.

As far as maximum LTV, the borrower may roll in allowable veteran closing costs, prepaids and the .50% VA funding fee, which may result in an LTV over 100%. Second liens may be subordinated.
A VA IRRRL loan may not result in cash back to the borrower.

A new case number is required for a VA IRRRL but when requesting the case at the VA Portal, you will choose “Generate Loan Number Only.” You will need the existing VA case number when ordering the new VA case number for the refi.

One thing I always commit to mentioning when discussing VA refinances- The LTV on a VA IRRRL can go to over 100% but the maximum LTV on a non-VA to VA refinance or cash out VA refinance is limited to 90% and is also limited to a maximum loan amount of $144000. A lot of folks miss that guideline and waste time processing VA refinances that cannot be approved.

There’s no better time to learn all you can about processing VA IRRRLs. They’re easy to process and easy money for you!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.