Instead, lenders will generate their own certification from their loan origination software
VA is only asking the lender to take the information they already collect from and provide to veterans, and display and provide that information into an easy to read format for the veteran
- Summary of collection of information: The new collection of information in 38 CFR (a)(3) requires lenders to provide borrowers with a net tangible benefit test. To satisfy the net tangible benefit test, the new loan must meet certain loan criteria; the lender must provide a comparison of the terms of the borrower’s current loan to the terms of the new loan; and the lender must provide the borrower a statement concerning the effects of refinancing on the borrower’s home equity. This information must be provided to the borrower by the lender in a standardized format not later than 3 business days of the refinance application and again at closing. The borrower must acknowledge receipt of this information on both occasions by signing the certification.
VA notes that it will not require lenders to complete a specific form. VA created a sample certification as an example, but this is not a required document or format.
- Description of need for information and proposed use of information: The information will be used by VA to ensure that the new loan meets the net tangible benefit test.
- Description of likely respondents: Lenders refinancing an existing loan product through a cash-out refinance loan.
- Estimated number of respondents: VA anticipates the annual estimated number of respondents to be 156,000 per year, which is based on a 3-year average of VA cash-out refinance loans. VA also estimates a one-time burden to the 16,000 loan officers who will require training on the new disclosure requirements.
Additionally, any information and response to yes/no questions could be answered automatically by the information that the lender is inputting as they underwrite the loan
The training estimate was derived from the 2017 Nationwide Mortgage Licensing System & Registry (NMLS) Industry Report showing 158,199 mortgage loan originators and the Ellie Mae Origination Insight Report indicating that VA represents 10 percent of the national mortgage market. VA assumes that loan officers will learn about this new disclosure through annual NMLS TRID/TILA training.
- Estimated frequency of responses: Two times per loan for generating and disclosing the information to the borrower. One time for training purposes.
- Estimated average burden per response: 5 minutes (total for both instances of generation and disclosure). 5 minutes (for training).
- Estimated total annual reporting and recordkeeping burden: The total annual burden is 12,906 hours. This represents the ongoing annual burden of 12,480 hours to generate and provide the disclosure plus the one-time hour burden from training (1,280 hours) that has been annualized to 426 hours per year for the first three years. The total estimated annualized cost to respondents is $483, (12,906 burden hours ? $ North Carolina cash advances per hour).
- VA also estimates a one-time technology cost associated with this information collection of $1,266,366 (annualized to $422,122 per year for the first three years). To derive this estimate, VA generated a high/low estimate of the one-time technology costs associated with this information collection. The low estimate assumes that 80 percent of affected lending entities (i.e., 960 of the 1,200 active VA lenders who make cash-out refinance loans) will not be required to complete any technology upgrades as the software companies who supply their loan origination software (LOS) systems will update their products in time to enable these lenders to comply with the regulatory requirements. The costs therefore represent the costs to the remaining 20 percent of lenders (i.e., 240 lenders) that will need to complete a technology upgrade to generate the disclosure in their LOS. The high estimate assumes that no LOS product updates will be in place on time and all 1,200 lenders will be required to assume the costs of completing a technology upgrade to generate their disclosure.