How to Process a VA Loan

By DB Jenkins

A VA (Veterans Affairs) loan is a mortgage that is extended to current or former members of the armed services. These loans are guaranteed by the Federal Department of Veterans Affairs. While the Federal Government is not a direct lender, they outsource these applications to qualified lenders who finance these mortgages for veteran customers. If you are a loan originator, it's important to know how to process one of these loans.

Determine the VA Case Number. This is the number assigned to the particular application you are processing. With this number, you'll be able to pull up the prospective borrower's information: personal data, employment and income documentation, property verification and assets. Double-check all information on the application for inaccuracies or typos. Contact the borrower with questions.

Confirm the eligibility of the borrower. There are specific restrictions when making a VA-insured loan. These eligibility requirements include: veteran status, household size (those for whom the borrower is responsible), qualified income (a debt to income ratio of 41% or less is required) and a disclosure of any federal loan delinquencies. You are not the underwriter, but you still must confirm that the borrower meets these requirements.

Submit the mortgage application for assessment in the Loan Prospector system. This may include transferring data to the pre-approval screens from the original application. If there are fields that are blank and you do not have the information on hand, you must contact the applicant. Enter the VA-specific data into the system. This includes veteran status, income and household size. Make sure to check the box for "Automated Underwriting." Submit the application for assessment.

Review the following after submitting the application: Full Feedback Certificate, Documentation Checklist and Merged Credit Reports. The Full Feedback Certificate will show a confirmed application and its review status (it may need to go to an underwriter for pre-approval). A Documentation Checklist will show the documents required by the borrower (pay stubs, W2s, military documentation). The Merged Credit Report is the full tri-bureau credit report for all borrowers on the loan.

Send the application to underwriting if no system pre-approval is granted. If the application is automatically pre-approved, contact the borrower to obtain the paperwork required to verify the application details--especially income. Once received, the application can be sent for final approval to the underwriter.

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