MBA’s Risk Management, Quality Assurance & Fraud Prevention Forum 2017 Loan Guaranty Service (aka VA Home Loan Program) Presented by: Sharvon Jackson Assistant Loan Production Officer & Alberto Planas Assistant Director of Oversight September 2017 Prepared by : Loan Guaranty Service
Agenda • Program Successes • Oversight Framework • VA Audit Findings 2
LGY Program Successes • Highest loan volume ever this year! – Over 730k loans guaranteed (valued over $187B) • Lowest interest rates in industry (July ‘17, Ellie Mae) – 4% vs industry average 4.25% • Highest closing rates for purchase loans (July ‘17, Ellie Mae) – 76.5% vs industry average 76.2% • Lowest foreclosure rate in industry (2Q ‘17, MBA NDS) – 0.99% vs 1.19% for Prime • Lowest serious delinquencies in industry (2Q ‘17, MBA NDS) – 2.03% vs 2.25% for Prime 3
VA Loans Guaranteed (FYTD July 2017) Loans Guaranteed (FYTD July 17) Total Loans 685,794 Total Purchase Loans 347,904 Total IRRRLs 182,292 Total Cash ‐ Out Loans 155,598 4
LGY Oversight Framework RLC process for LP (FFLR) ‐ statistical review of closed loans, additional • review of EPDs C&V (AMS service) – risk based appraisal reviews, including both desk & • field reviews LA (VALERI) – ensures proper servicing of VA loans, especially delinquent • loan servicing & claim payment accuracy LS Process for Accuracy – statistically valid random sample of all RLCs • oversight work MU process for Lenders & Servicers – ensure compliance with applicable • laws, regulations, etc. QA process for RLC – ensure compliance with applicable laws, regulations, • etc. & best practices RM process for ensuring nothing stops LGY objectives from being met • 5
Regional Loan Centers (RLCs) St. Paul Cleveland Denver Roanoke Phoenix Atlanta 5 St. Petersburg Houston Honolulu To reach the nearest RLC, please call 1 ‐ 877 ‐ 827 ‐ 3702 or For loan production questions, visit https://www.benefits.va.gov/homeloans/contact_lp_email.asp For appraisal ‐ related questions, visit https://www.benefits.va.gov/homeloans/contact_rlc_email.asp 6
National VA Lender Scorecard (FYTD July 2017) Loan Statistics AUS Statistics Avg Age 49 Total Loans 685,994 Avg Credit Score 713 AUS Total 480,724 Avg DTI 39.7% AUS Approve 455,827 Avg Loan Amount $254,483 AUS Approve % 94.8% Avg Interest Rate (All types) 3.675% AUS Refer 24,897 Avg Residual Income $2,784 AUS Refer % 5.2% Funding Fee Exempt % 41.5% FFLR Review Statistics Prior Approval Loans 3,102 Loans with Deficiencies % 58.7% Avg Cal Days to Guarantee 25.3 Incomplete File Letters Sent % 4.7% Days to Guarantee > 60 days 4.3% Avg Cal. Days to receive file 10.6 7
% of Reviews w/ Deficiency by Category (FYTD Jul17) 8
Request your VA Lender Scorecard To request your VA Lender Scorecard, contact Loan Guaranty’s Lender Liaison, Mark Connors, at mark.connors@va.gov 9
Most Common Lender Audit Findings Origination ‐ Quality Control Plan Lender Handbook (26 ‐ 7) Chapter 1: The Lender, Section 15 ‐ Elements of a • Quality Control Plan. This policy requires certain provisions MUST be included in the lender’s Quality Control (QC) plan. – Section 15, f: Deficiencies Reported to VA (Require prompt reporting of any violation of law or regulation, false statements or program abuses by the lender, its employees or any other party to the transaction to the VA office of jurisdiction, and provide for furnishing audit or review findings to VA on demand) – Reported to RLC LGO/ALGO (Avoid reporting overlay deficiencies and report only VA guideline deficiencies) – Section 15, l: Review of Loans (The QC plan must provide for the following on loans selected for review: Review of loans within 90 days of loan closing, written re ‐ verification of borrower’s employment, deposits, and all sources of funds, reordering of a new credit report from another credit source) 10
Most Common Lender Audit Findings (continued) LAPP ‐ Quality Control Plan Lender Handbook (26 ‐ 7) Chapter 1: The Lender, Section 15 ‐ Elements • of a Quality Control Plan Section 15, C (For lenders participating in LAPP, reviews include the quality control procedures) QC plans MUST outline any LAPP QC procedures. This would be a • substantial finding. Per Lender Handbook Chapter 13, section 1, every appraisal made for VA purposes must be reviewed by the lender’s VA authorized staff appraisal reviewer (SAR) under the Lender Appraisal Processing Program (LAPP) in order to: – confirm that the photographs accurately reflect the appraiser’s description of the subject and comparable properties 11
Most Common Lender Audit Findings (continued) – verify that the appraisal report is fully complete, clear and prepared according to industry ‐ accepted appraisal techniques and VA instructions – determine that the appraiser's methodology is appropriate and that the appraiser's conclusions are consistent, sound, supportable, logical and based upon data in the appraisal report – determine, through use of reasonably available information, that the appraiser's value recommendation and other conclusions are consistent with those in similar cases recently processed – identify all property ‐ related conditions and requirements that must be satisfactorily resolved before the property can become the security for a VA guaranteed loan, and – issue a notice of value. 12
Last but not least… Thanks for all that you do to help Veterans, Servicemembers & their families with their housing needs! 13
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