House passes bill to clarify securitization eligibility for VA loans


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.


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