The U.S. Department of Veterans Affairs recently issued
Circular 26-19-23 to provide interim guidance on the provisions of the Blue
Water Navy Vietnam Veterans Act of 2019 (Blue Water Act) that affect VA’s Loan
Guaranty Service. The amendments made by the Blue Water Act will apply to loans
that are closed on or after January 1, 2020.
The Blue Water Act increases the maximum VA guaranty amounts
for purchase, construction, and cash-out refinance loans that exceed the
Freddie Mac conforming loan limit. VA advises that for loans above $144,000,
the maximum amount of the guaranty will be 25 percent of the loan amount, regardless
of the Freddie Mac conforming loan limit. The Circular provides examples of how
to calculate the maximum guaranty available for a loan in situations in which
the veteran does and does not have the full entitlement available. (VA notes
that for Interest Rate Reduction Refinance Loans, it will continue to guaranty
25 percent of the loan amount without regard to the veteran’s available
entitlement or the Freddie Mac conforming loan limit.)
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