Another day, another change that some investors are now requiring — this one for people who are currently in a VA loan and want to do a VA streamline refinance.
For as long as I can remember, the VA streamline refinance (aka the VA IRRRL program) did not require an appraisal for the borrower to participate in the VA streamline program and get a lower interest rate.
But that may be changing. Or, maybe a better way to say it is that it for sure is changing for some lenders.
As of recently, some lenders who lend money on these loans to require some form of an appraisal. Some lenders are now requiring a full blown appraisal, some are only requiring a drive-by appraisal — but the point is that many are now requiring it where before they did not.
Note: I haven’t heard anything about FHA/VA changing their criteria for what they will insure — so to my knowledge, an appraisal is currently not required in order for a VA streamline to be insured.
As an example, an announcement by Wells Fargo to all correspondent lenders said:
“in an effort to mitigate the risk of declining home values on VA IRRRL transactions on May 18th will require the seller to obtain and deliver a conventional appraisal to Wells Fargo. Please Note: VA has indicated this appraisal should not be submitted to the VA with the guaranty package.”
Does this really make any sense?
Not really.
But it isn’t the first time that things haven’t made sense to me in the mortgage market recently.
If you are in the market for a VA streamline and your loan officer is telling you that an appraisal is now required, be sure to ask him if he has access to any other VA lenders – many lenders are still not requiring VA streamlines to have an appraisal.