source:
  type: guide
  id: va-m26-7-ch01-t09
  authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 1, Topic 9 — Withdrawal
    of Automatic Authority from Supervised or
  description: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 1, Topic 9 — Withdrawal
    of Automatic Authority from Supervised or.
  coverage_tier: operative
obligations:
- id: va-m26-7-ch01-t09-full
  canonical_id: va-m26-7-ch01-t09-full
  section: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 1, Topic 9 — Withdrawal
    of Automatic Authority from Supervised or
  type: do
  tags:
  - regulator-direct
  - va
  - va-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 1, Topic 9 — Withdrawal
      of Automatic Authority from Supervised or
    source_class: va-handbook
    source_url: https://www.benefits.va.gov/warms/pam26_7.asp
    snapshot_id: b4bc25cdd49513a7
    fetched_at: '2026-05-23T01:53:52Z'
    content_hash: sha256:2516e061c3a90ce65e72b43ae4022a97e784d65ec7580998c523b5dc69ba6520
    paragraph_quote: '9. Withdrawal of Automatic Authority from Supervised or Non-supervised
      Automatic Lenders Change Date February 1, 2019 • This chapter has been revised
      in its entirety. a. General VA can withdraw a lender’s automatic authority for
      proper cause, after giving the lender 30 days notice. This applies to both supervised
      and non-supervised lenders. VA regulations at 38 CFR 36.4349 provide the framework.
      The lender may continue processing loans on a prior approval basis after its
      automatic authority has been withdrawn. The remainder of this Topic gives the
      reasons a lender’s automatic authority can be withdrawn, and the corresponding
      period for which the withdrawal will be effective. b. Withdrawal for an Indefinite
      Period Withdrawal for an indefinite period can be based on any of the following:
      Failure to continue meeting basic qualifying criteria: • For supervised lenders,
      this includes loss of status as an entity subject to examination and supervision
      by a Federal or State regulatory agency. • For non-supervised lenders, this
      includes no approved underwriter, failure to maintain $50,000 working capital
      or $250,000 adjusted net worth, and/or failure to file the required financial
      statements. Any of the causes for debarment set forth in 38 CFR 44. During the
      probationary period for newly-approved non-supervised automatic lenders, automatic
      authority may be withdrawn for poor underwriting consistently careless processing,
      failure to provide loan files timely, or to provide other necessary documents
      as requested by VA. Continued on next page VA Pamphlet 26-7, Revised Chapter
      1: Lender Approval Guidelines 1-32 9. Withdrawal of Automatic Authority from
      Supervised or Non-supervised Automatic Lenders, continued c. Withdrawal for
      60 Days Withdrawal for 60 days can be based on any of the following: • Loan
      submissions show deficiencies in credit underwriting after repeatedly being
      called to the lender’s attention, such as the use of unstable sources of income
      to qualify borrower or ignoring significant adverse credit items affecting applicant’s
      creditworthiness. • Employment or deposit verifications are hand carried by
      applicants or otherwise improperly permitted to pass through the hands of a
      third party. • Consistently incomplete loan submissions after repeatedly being
      called to the lender’s attention. • Continued instances of disregard of VA requirements
      after repeatedly being called to the lender’s attention. Continued on next page
      VA Pamphlet 26-7, Revised Chapter 1: Lender Approval Guidelines 1-33 9. Withdrawal
      of Automatic Authority from Supervised or Non-supervised Automatic Lenders,
      continued d. Withdrawal for 180 Days Withdrawal for 180 days can be based on
      any of the following: • Loans conflict with VA credit standards and would not
      have been made by a lender acting prudently. • Failure to disclose to VA significant
      obligations or other information so material to the Veteran’s ability to repay
      the loan that undue risk to the Government results. • Employment or deposit
      verifications are hand carried by the applicant or otherwise mishandled, resulting
      in submission of significant misinformation to VA. • Substantiated complaints
      are received that the lender misrepresented VA requirements to Veterans to the
      detriment of their interests. Examples: - The Veteran was dissuaded from seeking
      a lower interest rate based on lender’s incorrect advice that such options were
      excluded by VA requirements. - Closing documents show instances of improper
      charges to Veteran after the impropriety of such charges are called to lender’s
      attention by VA, or the lender refuses to refund such charges after notification
      by VA. - Other instances of lender actions prejudicial to the interests of Veterans
      such as deliberate delays in scheduling loan closings. e. Withdrawal for 1 to
      3 Years Withdrawal for 1 to 3 years can be based on any of the following: •
      Failure to properly disburse loans, such as loan disbursement checks are returned
      due to insufficient funds. • Involvement by the lender in the improper use of
      a Veteran’s entitlement, such as knowingly permitting the Veteran to violate
      occupancy requirements. • Lender involvement in the Veteran’s sale of entitlement
      to a third party, such as a lender makes the loan with the knowledge that the
      Veteran is not purchasing the property to be his or her home. Instead, the Veteran
      intends to transfer title to a third party who assumes the loan shortly after
      closing. VA Pamphlet 26-7, Revised Chapter 1: Lender Approval Guidelines 1-34'
  judgment: false
