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.)