VA Cash-Out Seasoning Requirement

Question:

I saw a footnote on one of your charts that says there is a 210-day seasoning requirement for a conventional cashout loan to a VA cashout. However, VA guidelines state that for VA purposes, the loan seasoning requirement does not apply to cash-out refinancing loans made to refinance non-VA guaranteed loans and/or other indebtedness secured by liens of record. Can you confirm this is required?

Answer:

VA and Ginnie Mae do not see eye-to-eye on this topic!

You are correct that VA doesn’t have a seasoning policy on VA Cash Out Refinances that refinance non-VA loans. Our VA Refinance Loans chart is footnoted regarding the seasoning information to explain that the stated seasoning requirements reflect Ginnie Mae’s policy, which is more stringent than VA’s policy. If you follow VA’s policy, the loan will be ineligible for sale in a Ginnie Mae pool. Therefore, we recommend that you discuss your company’s policy, as your secondary marketing team may have outlets for both scenarios.

Ginnie Mae Seasoning uses the note date as your benchmark for measuring the seasoning.

The note date of the new refinance must be on or after the later of:

• 210 days after the 1st payment due date AND
• 6 monthly payments have been made.

Some lenders do not sell to GNMA and will not require seasoning. If you have a loan that needs this exception to the GNMA overlay, we recommend that you discuss this issue with your lender or investors.

Reference:

GNMA APM 19-05

Subscribers have access to the VA Loan Comparison Chart, which is on the ‘Charts & Checklist’ page under ‘VA.’