House passes bill to clarify securitization eligibility for VA loans

Adjusts seasoning period to give lenders more clarity

The House passed a bill Tuesday that adjusts the seasoning requirements determining when a loan backed by the Department of Veterans Affairs can be securitized into a Ginnie Mae pool.

The Protect Affordable Mortgages for Veterans Act of 2019, also known as H.R. 1988, allows the 210-day seasoning period established in an earlier rulemaking to begin on the due date of the first payment of the initial loan.

Previous requirements began the seasoning period on the date when the borrower makes the first payment. But the problem with that was that if the loan is refinanced, the lender doing that refinance is not likely to know that date unless it also originated the original loan, which is not always the case.

The new bill solves that problem readjusting the beginning of the seasoning period.

The Mortgage Bankers Association lobbied lawmakers to pass this bill in order to fix this glitch, which was set forth in the Economic Growth, Regulatory Relief, and Consumer Protection Act that was signed into law last May.

The MBA pushed for change, northing that it would give lenders greater compliance certainty and ensure that loans are not pooled in error.

The bill – which was introduced by Rep. David Scott, D-GA, and Rep. Lee Zeldin, R-NY – was approved in the House, while another version, S. 1749, was approved in the Senate.

It must be signed by President Donald Trump before it becomes law.


Most Popular Articles

UWM to credit borrowers up to $600 for their appraisal costs

For the next two months, United Wholesale Mortgage (UWM) will credit borrowers up to $600 for their appraisal costs, the lender said in a statement Wednesday.

Jan 26, 2022 By

Latest Articles

Groups blast FHA draft defect taxonomy in joint letter

Consumer advocates, fair housing groups, banks and mortgage lenders today joined forces to critique the Federal Housing Administration’s proposed servicing defect taxonomy.

Jan 28, 2022 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please