On May 24, 2018, the “Protecting Veterans from Predatory Lending Act” (“VA Act”) was signed into law, effective as of that date, as section 309 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law 115-174). The VA Act, attached to this memorandum as Exhibit A, supersedes certain elements of the Interim Final Rule (“IFR”) published by VA in the May 9, 2014, Federal Register (79 FR 26620, click here). The IFR established the definition of “qualified mortgage” for VA-guaranteed loans and further classified such loans as having either safe harbor protection or the rebuttable presumption protection, in accordance with the ability to repay provisions in §1026.43 of Regulation Z
The VA Act established certain minimum seasoning requirements (at least 6 months) and recoupment requirements (36 months or less) on all Interest Rate Reduction Refinance Loans (“IRRRL”) loans. Because of these increased seasoning and recoupment requirements, the VA Act effectively eliminated the category of VA-guaranteed IRRRLs that had been classified as rebuttable presumption qualified mortgages under IFR §36.4300(c)(2). This is because under the VA Act, loans that do not meet these requirements are no longer eligible for the VA guaranty.