38 CFR §36.4315 — Loan modifications
38 CFR §36.4315 authorizes the holder of a VA-guaranteed loan to modify the loan without prior VA approval if all 14 §36.4315(a) conditions are met; otherwise the file must be submitted to the Secretary.
Verbatim regulatory text
Verbatim provisions from 38 CFR §36.4315 — Loan modifications — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
38 CFR §36.4315(a) — Loan modification without prior VA approval: 14 conditions
(a) The terms of any guaranteed loan may be modified by a documented agreement between the holder and the borrower, without prior approval of the Secretary , if all of the following conditions are met:
38 CFR §36.4315(a)(7) — Modification frequency cap: 1 per 3-year period, 3 over life
(7) A loan has not been modified more than once in a 3-year period or more than 3 times during the life of the loan ;
38 CFR §36.4315(a)(14) — No cash back to obligor from VA loan modification
(14) The obligor will not receive any cash back from the modification.
38 CFR §36.4315(b) — Secretary approval required when (a) conditions not met
(b) If a loan fails to meet one or more of the conditions identified in paragraph (a), the holder must submit the loan file to the Secretary for approval before entering into any loan modification agreement. The Secretary will grant such approval if the Secretary determines that the modification is in the best interests of the veteran and the Government after balancing the risks of non-approval versus approval despite the absence of one or more of the conditions identified in paragraph (a) of this section.
38 CFR §36.4315(a) — Loan modification without prior VA approval: 14 conditions — enumerated items (chapeau recall fix)
(1) The loan is in default ; (2) The event or circumstances that caused the default has been or will be resolved and it is not expected to re-occur; (3) The obligor is considered to be a reasonable credit risk, based on a review by the holder of the obligor's creditworthiness under the criteria specified in § 36.4340 , including a current credit report. The fact of the recent default will not preclude the holder from determining the obligor is now a satisfactory credit risk provided the holder determines that the obligor is able to resume regular mortgage installments when the modification becomes effective based upon a review of the obligor's current and anticipated income, expenses, and other obligations as provided in § 36.4340 ; (4) At least 12 monthly payments have been paid since the closing date of the loan ; (5) The current owner(s) is obligated to repay the loan , and is party to the loan modification agreement; (6) The loan will be reinstated to performing status by virtue of the loan modification; (7) A loan has not been modified more than once in a 3-year period or more than 3 times during the life of the loan ; (8) The loan as modified will bear a fixed-rate of interest, which—
38 CFR §36.4315(a) — Loan modification without prior VA approval: 14 conditions — enumerated items (chapeau recall fix) — enumerated items (chapeau recall fix)
(i) May not exceed the most recent Freddie Mac Weekly Primary Mortgage Market Survey Rate for 30-year fixed-rate conforming mortgages (U.S. Average), rounded to the nearest one-eighth of one percent (0.125%), as of the date the Modification Agreement is approved, plus 50 basis points; (ii) After being determined and selected in accordance with paragraph (i), is not more than one percent higher than the existing rate on the loan ; or, (iii) In the case of a loan in which a State, Territorial, or local governmental agency provided assistance to the veteran for the acquisition of the dwelling , and the law providing that assistance precludes any revision in the interest rate on the loan , then the interest rate on the modified loan is the same or less than that on the original note evidencing the loan ;