News to me today!, apparently the VA came out with initial disclosures that must be signed by the borrower within three days of application, and this is required on all VA loan closings following April 1st (not a joke).

So now our conundrum is we have a VA applicant who applied in March who is going to be approved for credit, catch is he was not given these new disclosures to sign as this file was supposed to originate a little soon. We have since started a new app and had these new VA disclosures signed and this file will go through.

So here is the rub, what do we do now with that initial app?

Since it is basically a duplicate of an originated app but not finished, should it be treated as such and just be ignored? I don't think so since it has a different loan number and app date. I think it needs a turn down decision, but what? Approved not Accepted? Denied? Darned to sit in limbo for eternity?

I appreciate any help, thanks!

So - what is the citation for this new disclosure requirement??

This is not my usual area, but the rule came out in the VA Circular 26-18-1. The Statement is outlined in the VA Lender's Handbook, Ch. 6 section 1d.

If that's not what you were looking for let me know.

If the borrower applied before the new disclosure became effective and the new disclosure are for applications taken on or after, why did you start the process over??

"this is required on all VA loan closings following April 1st "

This is only applicable to IRRRLs.

Yes this one is an IRRRLs. And the rule applies to closings after April 1st, that is why the application was started over.

Again I'm wanting some advice on how to handle the initial application decision. Help in that area would be appreciated please.

Thanks,

Any thoughts on a decision action?

There is no guidance on how to report a file because the bank made a mistake and chooses to force the borrower to start over. I assume that prior to doing this, a call was made to the VA?

YES we contacted the VA, they would not grant an exception therefore not insuring the loan and making it unsellable to the secondary market. The VA stated that we would need to recreate the new application and issue the disclosure.

As to the "mistake", the borrower had to leave the country and pushed closing to after April 1st. We contacted the VA prior to that date and worked diligently with the organization while following our own procedures.

I am unsure as what to label as a decision action, and to ensure we are reporting our data accurately I am contacting this forum for its expertise in situations like this. I am currently leaning towards approved not accepted as we were going to originate, but I could also see denial since the VA would not accept.

I am looking for advice on this decision.

Thanks.

I don't see how you could do ANA as it wasn't the borrower's decision to not accept. You may could have done a denial with a C/O to follow VA's new requirement...at this point, maybe you have just a denial.

I'd tend towards denial. In my eyes, approved not accepted means you approved the loan and then the borrower decided not to go through with the loan. The borrower was still planning to move forward; it was the bank's decision to start a new app.

Whatever you choose, document it thoroughly.

Thank you very much Joker and MScarn.