VA loans with Bank of America- Streamline with Low VA Rates

Something that most military homeowners are not aware of is that brokers or mortgage companies that have access to wholesale rates sheets can get them a much lower rate than if they (Veteran) were to call Bank of American themselves.  This may not make a lot of sense on the surface but if you have ever shopped at Costco or Sam’s club then this example may help you get a better grasp on this.

Why can Costco sell you 20 lbs of filet mignon cheaper than if you were to go directly to let’s say your local butcher and buy it directly from them?  The answer is simple.  Costco has negotiated huge discounts due to the volume of meat they buy, due to the fact that they (Costco) spend money marketing and selling the meat and now this is money that your local butcher will not have to pay to move their product.

VA mortgage loans are very similar.  Bank of America, of course, has its own loan officers, branches and offices and is certainly willing to do their own loans through what is referred to as a “retail channel.”  A retail location is like the Bank of America bank on the corner or in the shopping plaza.  If you were to call Bank of America directly as a consumer you will work with their retail division and get great service and decent rates.  However, if you call Low VA Rates, a division of Low VA Rates or any other broker that has access to wholesale rates, you will get a much lower rate.

I am not a veteran and do not have a VA loan of course.  My entire mortgage profession has been spent working on VA loans and assisting military families with their home loans.  The other day Bank of America contacted me directly because I have a loan with them on a rental property of mine and they asked me if I wanted to refinance.  I will keep this story short, but the rep at B of A when I showed him what wholesale rates I could get on my own, simply told me he could not compete and I should do it myself.  Here is an excerpt from that email:

I understand……what you saying is that wholesale is at a price of 104.00 ( I assume they want to get paid) so they can give you 3 points….and we are at 101.00….

My manager has been with Bank of America when it was Countrywide  for 15 years and he says there is no way we can be 3 points away from wholesale, but you know what you’re doing and if you can get it I would jump on it too..

So for those of you with VA loans at Bank of America what does this mean to you?  I am not trying to suggest that Bank of America is ripping you off or that you should not refinance straight through the retail loan officer, but I do want to make you aware of your options and suggest seeing what Bank of America can do for you and then contacting Low VA Rates or another broker and see what they can do for you.

There has never been a better time than now to streamline your VA loan and take advantage of seriously low VA interest rates. Low VA Rates is dedicated to assisting you with any VA home loan questions you may have.

Veterans are Being Robbed of their Hard Earned Loan Benefits

I might get fired for posting this, but its worth it to me to explain to Veterans what is happening in the mortgage industry and specifically what so called new requirements many of the Nation’s Top Lenders are requiring to approve VA streamline refinances.  One of the main benefits of getting a VA loan is the option or ability to do a streamline refinance.  Basically a streamline refinance is where a Veteran gets a new mortgage at a lower rate without going through the hassle of credit check, appraisal and income verification.

HERE IS THE VA’S DEFINITION OF A STREAMLINE or IRRRL

“A Veteran who obtained a VA loan may refinance it with a VA guaranteed loan at a lesser interest rate without using additional entitlement.”  They go on the list restrictions and instructions with this refinance.  Here they are:

1. The new loan must be at a lesser interest rate than the old VA loan EXCEPT when refinancing an existing ARM with a new fixed rate mortgage.

2. The dollar amount of guaranty applicable to the prior VA loan is transferred to the new loan.

3. Although no underwriting IS REQUIRED, approval of new credit may be required by the trustee in a Chapter 13 BK

4. NO APPRAISAL IS REQUIRED.

5. The Veteran may not obtain cash proceeds.

6. The new loan is limited to the balance of the old loan, the funding fee, up to $6000 of energy efficient improvements, and allowable closing costs including not more than 2 discount points.

7. The term of an IRRRL any not exceed the original term of the loan being refinanced by more than 10 years.

The one that I want to draw attention too is number 4.  The no appraisal option is what makes this one of the best ways for a Veteran to refinance his/her home.  Some Lenders have taken upon itself to overwrite the VA’s policy and start instituting appraisals on VA streamline refinances starting July 1st.  Here is the email I received from them:

Non-XXXXXXX  (lender name removed) VA Interest Rate Reduction Refinance Loan (IRRRL) Transactions

May Require A Conventional Appraisal – Effective 7/1/09

In an effort to mitigate the risk of declining home values on VA IRRRL transactions, effective with registrations on and after July 1, 2009, for non-XXXXXXX serviced VA IRRRLs, XXXXXX  Wholesale Lending will require the Broker to obtain and deliver to XXXXXXX:

• A conventional appraisal that supports the total loan amount (appraised value >= base loan amount plus VA funding fee), or AVM that supports <=95% LTV

Note: Conventional appraisals ordered for non-XXXXXX serviced VA IRRRL transactions are not subject to Home Valuation Code of Conduct (HVCC) requirements. Additional comments and/or reminders:

• If a conventional appraisal is not in the loan file upon receipt, XXXXXX will order an AVM to verify the value. AVMs are not allowed for condominiums, manufactured homes, multi unit properties (2-4 unit), investment properties and second homes. If the AVM does not return an acceptable result, XXXXX will condition for a full appraisal. • It will be the responsibility of the broker to order the full conventional appraisal.  VA has indicated this appraisal should not be ordered with the case number assignment through VA’s The Appraisal System (TAS) and should not be submitted to VA with the guaranty package.

o VA’s Jurisdictional Maximum VA Appraisal Fee Chart must be met. The Veteran may not be charged an appraisal fee exceeding VA’s maximum.

o The 1004 MC (Market Conditions) form is required when an appraisal is required.

o XXXXXX  Appraisal Policy applies (Broker Guide Section 300).

This change in policy (even though VA does not require it) will limit thousands of Veterans from refinancing their homes.  Look at what is happening in the market today.  Job loss is at an all time high, taxes are going up, inflation will be a huge factor.  Right now people need to save money more than ever.  I also find it interesting that the Federal Government which VA is a part of, is dumping so much money in the market to help with rates and stimulation, yet the biggest bank is instituting this which will keep our VETERANS WHO FOUGHT FOR THIS COUNTRY unable to refinance to better their situation.  Who now days has equity in their home?  I don’t.  Wells Fargo states that “in an effort to mitigate the risk of declining home values on VA IRRRL transactions”.  Give me a break.  What’s more important to a Veteran – equity in their home, or risk losing their home because of a financial situation change when a lower monthly payment is needed.

My advice is to all Veterans – write your congressman and contact the Dept of Veteran Affairs and let them know your feelings.  Hopefully if enough people respond the 100 pound gorilla (XXXXXX) will wake up and realize they are not doing anybody any favors.

To Contact your Congressman CLICK HERE

To Contact the VA via email CLICK HERE

To Call your VA office CLICK HERE

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