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> VA ENTITLEMENT refers to the portion of a loan guaranteed by DVA, the maximum amount guarantied loan for residential, vet occupy, qualified VA-eligible borrower which depends on vet's service and county limits. The VA provides this backing to the lender, to encourage lenders to make loans to veterans. Debt to income ratio of 41%, 1% flat fee for lender, no other fees VA would pay. Other fees if any, seller, builder, or buyer then has to pay. No prepayment penalty, fixed rate or ARM, no max loan, no down payment, 1-4 residential unit, no mortgage insurance, may have emergency forbearance period. There is a FUNDING FEE (FF): paid at closing either cash or included in the loan. For regular military : 0 down payment (DP) then 2.5%FF, less than or equal to 5% DP then less FF, 5.1-9.9% DP then 1.5% FF, 10% or more DP then 1.25% FF. National guard, 0 down, fee is 2.4% .Funding fees required for VA IRRRLS , Interest Rate Reduction Refinance Loan, VA-guaranteed loan made to refinance an existing VA-guaranteed loan, generally at a lower interest rate than the existing VA loan, and with lower principal and interest payments than the existing VA loan. Generally, no appraisal, credit information or underwriting is required on an IRRRL, and any lender may close an IRRRL automatically. FORM 26-8923 form is used for the Interest Rate Reduction Refinancing VA Loan Worksheet.Funding fee for either first time or subsequent use or refinancing is ½% of the loan balance. Disabled, widow, do not pay FF. Reserves or the National Guard for at least 6 years is eligible. The VA determines a vet's eligibility for a VA loan, they recipient are issued a CERTIFICATE OF ELIGIBILITY by filing form DD-214. VA Guaranty(G) depends on the county's ceiling and VA guaranty amount: loan up to $45K, 50% G; $45001 to $5620 $22500 G; $44K to 417K 25% of loan. over $417K 25% of loan up to county max. VA Certificate of Eligibility form number is Form 26-8320. The Automated Certificate of Eligibility is generated through WEBLGY or print screen of Prior Loan Validation. Only verified income can be used to analyze a Veteran's creditworthiness. 26-6393 VA form is used by the underwriter to determine the qualification. Notice of Value(NOV) a document issued by DVA setting forth a property's current market based n VA approved appraisal.
(ARM) is a loan with an interest rate that adjusts in accordance with a movable money market conditions and the agreed upon index. The interest rate on the ARM only changes if the chosen index changes. The borrower's payment stays the same for a specified time (for example, one year or two years) depending on the borrower's agreement with the lender. At the agreed upon time, the rate adjusts according to the current index rate.Features—initial interest rate and payment, adjustment period, index, margin, and caps.

For most ARMs, the interest rate and monthly payment change every month, quarter, year, 3 years, or 5 years. The period between rate changes is the ADJUSTMENT PERIOD.

For a limited period of time, every ARM has an initial interest rate and payment. These payments are usually lower than if the loan were a fixed-rate loan. In some ARMs, the initial rate and payment adjust after the first month. Other ARMs keep the initial rate and payment for several years before an adjustment is made.
For most ARMs, the interest rate and monthly payment change every month, quarter, year, 3 years, or 5 years. The period between rate changes is the adjustment period.

1-year ARM. This means the interest rate and payment can change once every year.

Hybrid ARMs have two interim caps. A 5/1 ARM has a 5-year cap for the first adjustment period and an annual cap thereafter.
ARMs with different indexes are available for both purchases and refinances.
Payment Cap: payment cannot go above a set payment cap per period and could cause negative amorization.

The lender or mortgage broker may offer a choice of loans that include discount points or prepayment penalties.
A hybrid ARM may be desirable for borrowers who plan to sell their homes or pay off their loans within a few years.
A hybrid ARM combines the features of a fixed-rate loan with those of an adjustable-rate loan. The fixed-rate feature gives the borrower some security with fixed payments in the initial term of the loan. The adjustable-rate feature is that the initial interest rates on these loans are typically lower than a fixed-rate loan. Initially, a fixed interest rate exists for a period of 3, 5, 7, or 10 years.
At the end of the fixed-rate term of the loan, the interest rate adjusts periodically with an economic index. This adjustment period begins on what is called the reset date for the loan.
Hybrid ARMs are often advertised as 3/1, 5/1, 7/1, or 10/1 ARMs. These loans are a mix (hybrid) of a fixed-rate period and an adjustable-rate period. The interest rate is fixed for the first few years of these loans, for example, for 5 years in a 5/1 ARM. After that, the rate may adjust annually (the 1 in the 5/1 example) until the loan is paid off.
3/1, 5/1, 7/1, 10/1 ARMs
The first number tells how long the fixed interest-rate period will be.
The second number tells how often the rate will adjust after the initial period.
A 2/28 or 3/27 ARM is another type of hybrid ARM loan. For this type of ARM, the first number is how long the fixed interest-rate period will be and the second number is the number of years the rates on the loan will be adjustable. Some 2/28 and 3/27 mortgages adjust every 6 months, not annually.
Before the interest rate on the loan begins to adjust, the borrower can decide to sell the property or refinance the loan. The borrower takes a gamble with a hybrid loan by hoping that interest rates will be low when the note rate begins to adjust.
The graduated payment mortgage is another alternative to an adjustable-rate mortgage. A graduated payment mortgage (GPM) is a fixed-rate loan with initial payments that are lower than the later payments. The difference between the lower initial payment and the required amortized payment is added to the unpaid principal balance. This loan is for the buyer who expects to be earning more after a few years and can make a higher payment at that time.
Unlike an ARM, GPMs are fixed-rate loans and have a fixed payment schedule. With a GPM, the payments are usually fixed for 1 year at a time. Each year for 5 years, the payments graduate from 7.5% to 12.5% of the previous year's payment.
GPMs are available in 30-year and 15-year amortization and for both conforming and jumbo loans. Because of the graduated payments and fixed interest rate, GPMs have scheduled negative amortization of approximately 10.0% to 12.0% of the loan amount depending on the note rate. The higher the note rate, the larger the negative amortization becomes. This is comparable to the potential negative amortization of a monthly adjusting ARM, which can amount to 10.0% of the loan amount.
Both GPMs and ARMs give the consumer the ability to pay the additional principal and avoid the negative amortization. However, in contrast to an ARM, the GPM has a fixed payment schedule so additional principal payments reduce the term of the loan. The ARM's additional payments avoid negative amortization and the payments decrease while the term of the loan remains constant.
The note rate of a GPM is traditionally .5% (half of a percent) to .75% (three- quarters of a percent) higher than the note rate of a straight fixed-rate loan. The higher note rate and scheduled negative amortization of the GPM make the cost of the mortgage more expensive to the borrower in the end. In addition, the borrower's monthly payment can increase by as much as 50% by the final payment adjustment.
The lower qualifying rate of the GPM helps borrowers maximize their purchasing power and can be useful in a market with rapid appreciation. In markets in which appreciation is moderate and a borrower needs to move during the scheduled negative amortization period, the property can be encumbered for more than it is worth.
A Federal Law for consumer protection statute, first passed in 1974.

The purposes of RESPA are to help consumers become better shoppers for settlement services and
to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.

Details about RESPA:
1. RESPA requires that borrowers receive disclosures at various times. Some disclosures spell out the costs associated with the settlement, outline lender servicing and escrow account practices and describe business relationships between settlement service providers.

2. RESPA also prohibits certain practices that increase the cost of settlement services. Section 8 of RESPA prohibits a person from giving or accepting anything of value for referrals of settlement service business related to a federally related mortgage loan. It also prohibits a person from giving or accepting any part of a charge for services that are not performed. Section 9 of RESPA prohibits home sellers from requiring home buyers to purchase title insurance from a particular company.

RESPA in general:
RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. HUD's Office of RESPA and Interstate Land Sales is responsible for enforcing RESPA.

RESPA required disclosures:
At the time of loan application
When borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the borrowers:

a Special Information Booklet, which contains consumer information regarding various real estate settlement services. (Required for purchase transactions only) and
a Good Faith Estimate (GFE) of settlement costs, which lists the charges the buyer is likely to pay at settlement. Depending on the type of charge and service provider selected, the difference between the estimated costs (GFE) and actual costs at settlement (HUD-1 settlement statement) may be subject to tolerance levels. If tolerance requirements are exceeded, then the borrower may be due a refund from the lender. When a loan originator permits a borrower to shop for third-party settlement services, the loan originator must provide the borrower with a written list of settlement service providers at the time of the GFE.
a Mortgage Servicing Disclosure Statement, which discloses to the borrower whether the lender intends to service the loan or transfer it to another lender.
If the borrowers don't get these documents at the time of application, the lender must mail them within three business days of receiving the loan application.

If the lender turns down the loan within three days, however, then RESPA does not require the lender to provide these documents.
The RESPA statute does not provide an explicit penalty for the failure to provide the Special Information Booklet, Good Faith Estimate or Mortgage Servicing Statement. However, bank regulators may choose to impose penalties on lenders who fail to comply with federal law. Please read the section on RESPA enforcement for more information.

Disclosures before settlement/closing occurs:
The terms "settlement" and "closing" can be and are used interchangeably.

An Affiliated Business Arrangement (AfBA) Disclosure is required whenever a settlement service provider involved in a RESPA covered transaction refers the consumer to a provider with whom the referring party has an ownership or other beneficial interest.

The referring party must give the AfBA disclosure to the consumer at or prior to the time of referral. The disclosure must describe the business arrangement that exists between the two providers and give the borrower an estimate of the second provider's charges.

Except in cases where a lender refers a borrower to an attorney, credit reporting agency or real estate appraiser to represent the lender's interest in the transaction, the referring party may not require the consumer to use the particular provider being referred.

The HUD-1 Settlement Statement is a standard form that clearly shows all charges imposed on borrowers and sellers in connection with the settlement. The HUD-1 includes a comparison chart to help borrowers compare the charges disclosed on the GFE and the actual charges listed on the HUD-1. RESPA allows the borrower to request to see the HUD-1 Settlement Statement one day before the actual settlement. The settlement agent must then provide the borrowers with a completed HUD-1 Settlement Statement based on information known to the agent at that time.

Disclosures at settlement
The HUD-1 Settlement Statement shows the actual settlement costs of the loan transaction. Separate forms may be prepared for the borrower and the seller. Where it is not the practice that the borrower and the seller both attend the settlement, the HUD-1 should be mailed or delivered as soon as practicable after settlement.

The Initial Escrow Statement itemizes the estimated taxes, insurance premiums and other charges anticipated to be paid from the Escrow Account during the first twelve months of the loan. It lists the Escrow payment amount and any required cushion. Although the statement is usually given at settlement, the lender has 45 days from settlement to deliver it.

Disclosures after settlement
Loan servicers must deliver to borrowers an Annual Escrow Statement once a year. The annual Escrow account statement summarizes all escrow account deposits and payments during the servicer's twelve month computation year. It also notifies the borrower of any shortages or surpluses in the account and advises the borrower about the course of action being taken.

A Servicing Transfer Statement is required if the loan servicer sells or assigns the servicing rights to a borrower's loan to another loan servicer. Generally, the loan servicer must notify the borrower 15 days before the effective date of the loan transfer. As long the borrower makes a timely payment to the old servicer within 60 days of the loan transfer, the borrower cannot be penalized. The notice must include the name and address of the new servicer, toll-free telephone numbers, and the date the new servicer will begin accepting payments.