In a letter to the VA
, MBA President and CEO Robert Broeksmit cited a “significant operational challenge” in the new VA disclosures that would impose required borrower disclosures which are not readily available to MBA member lenders offering such refinance loans. Broeksmit pointed out that the disclosure must include "the total the borrower will have paid after making all payments of principal, interest, and mortgage or guaranty insurance (if applicable), as scheduled, for both the new loan and the loan being refinanced," but he added that in many cases this would involve information that is not available to the lender offering to refinance the loan.
"If the lender offering the refinance loan is not the institution that originated or services the existing loan, it will not have access to the information needed to provide an accurate figure to the borrower," Broeksmit said. "For example, without the original promissory note and other relevant materials, the lender will not always be able to determine the amortization schedule of the existing loan, which will adversely affect the accuracy of the estimate of the total remaining payments. Similarly, an institution that does not service the existing loan would not have knowledge of any principal curtailments that would affect the duration of mortgage insurance payments or any forbearance that was offered in response to a natural disaster."
"In order to provide borrowers with this disclosure no later than three business days following the loan application, it is critical that lenders be able to rely on automated processes to produce the necessary information," Broeksmit added. "The 60-day implementation period does not provide nearly enough time to allow for such automation and the requisite quality control."