VA requires the audit system
to review mortgage loan files to evaluate
the loan origination and underwriting functions. The
review must determine, at
a minimum, whether the following requirements have
Each loan file contain all required loan processing,
No relevant loan documents were signed in blank
by the borrower or
an employee of lender. Any corrections
were initialed by the borrower or
employee. No verification of employment, verification
of deposit or credit
reports was handled by the borrower or any interested
reports. The credit reports conform to
the required standards and, if more than one credit
report was ordered, all credit reports submitted
with the loan package to the VA.
in credit information.
There is a correlation of each outstanding liability
and each asset of the
borrower and coborrower used to qualify for the loan
to those listed on the
initial loan application. If any discrepancies exist,
the loan file documents how this was resolved. All conflicting
information or discrepancies were resolved and properly
documented in writing prior to submission of
the loan to VA for guaranty.
Any outstanding judgments appearing on the credit
report were listed on the
application with an accompanying explanation and documentation.
If there is a delinquency or judgment involving
debt to the federal government, evidence was provided
showing how this was satisfactorily resolved.
returns. If the borrower is self-employed, the
loan file includes any required
tax returns, profit and loss statement and a
current balance sheet.
statement. The HUD-1 settlement statement
was accurately prepared and properly
Fees. Any fees charged to
the veteran were appropriate and accurate.
to VA. The loan properly
was properly documented and submitted in accordance with
standardized loan file set-up procedure and was
current at the time its was submitted to VA for
fee. VA funding fees are remitted
within 15 days from the
date of loan closing and late charges and interest penalties
are promptly submitted.
Strawbuyer. There was no transfer
of the property by the borrower at the time of closing
or soon after
indicating a possible misuse of the veteran’s
The escrow funds received from the borrower were not
excessive and were not used for any purpose other
than those for which they were