WASHINGTON—The Department of Veterans Affairs (VA) has issued a circular outlining new policies for the interim final rule that amended its regulations regarding VA-guaranteed or insured cash-out refinance loans.
The rule went into effect Feb 15. Another circular was also issued to make a clarification to the first.
The rule is only applicable to credit unions that refinance VA loans. It implements a provision of the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) aimed at protecting veterans from predatory lending.
NAFCU noted it has asked for guidance on the required standardized form that must be used for disclosure when commenting on the rule last month. The standardized form has not yet been approved by the Office of Management and Budget (OMB), but can be used by credit unions in the interim. It must be provided to the borrower within three days from the date of the loan application under the new rule.
The association also raised concerns about increased regulatory burdens the rule could have on credit unions and argued that "credit unions do not engage in the types of predatory lending practices this rule intends to target."