source:
  type: regulation
  id: va-m26-7-ch04
  authority: "VA Lender Handbook M26-7 Chapter 4 — Credit Underwriting"
  description: 'VA Pamphlet 26-7 Chapter 4 governs credit underwriting for VA loans.

    '
obligations:
- id: va-m26-7-ch04-reserves-activation-income
  canonical_id: va-m26-7-ch04-reserves-activation-income
  section: "VA M26-7 Ch. 4 — Reserves/National Guard Activation Income Analysis"
  description: '[UNDERWRITER] must consider whether a borrower whose income is being

    used to qualify for a loan may experience a change in income due to

    participation in a Reserves/National Guard unit subject to

    activation. An activated Reservist/Guard member applying for a loan

    must present orders indicating their current active-duty tour is not

    to exceed 12 months.

    '
  type: do
  audit_question: For every VA loan where the borrower's qualifying income includes Reserves/National Guard pay (or where activation is foreseeable), can [UNDERWRITER] evidence consideration of activation-driven income change and, where activated, retention of orders showing the current active-duty tour does not exceed 12 months?
  workflow_phase: origination
  owner_role: underwriter
  secondary_owner_role: loan_officer
  cadence: per_loan
  consequence: ''
  tags:
  - round-b
  - regulator-direct
  - va
  - m26-7
  - ch04
  - income-analysis
  - reserves
  - promoted
  primary_source:
    tier: 1
    authority: "VA Lender Handbook M26-7 Chapter 4 — Credit Underwriting"
    source_class: va-handbook-m26-7
    source_url: https://benefits.va.gov/WARMS/M26_7.asp
    snapshot_id: 84a199d5bffee03b
    fetched_at: '2026-05-23T01:50:00Z'
    content_hash: sha256:ed2c25537e999a4e2d8f0edd102b19b58213237b1a9caa927fddfca170b14a9c
    paragraph_quote: 'Lenders must consider if a borrower, whose income is being used to qualify '
    drafter_attestation: "Copied verbatim from VA Handbook snapshot 84a199d5bffee03b (M26-7 Ch. 4 — Reserves/Guard activation income) at 2026-05-23. Source PDF retrieved via Wayback Machine."
  promoted_at: '2026-05-23T02:02:18+00:00'
  promoted_from: va-m26-7-ch04-roundb-v1.yaml
  program_review: Does the program ensure the underwriter considers activation-driven income change where qualifying income includes Reserves/Guard pay, and — where activated — retains orders showing the current active-duty tour does not exceed 12 months?
  file_review: Spot-check files with Reserves/Guard income; confirm the activation-income analysis and any activation orders. The officer judges whether the income-continuance analysis adequately accounts for activation risk.
  judgment: true
- id: va-m26-7-ch04-gift-funds-verification
  canonical_id: va-m26-7-ch04-gift-funds-verification
  section: "VA M26-7 Ch. 4 — Gift Funds Verification"
  description: '[UNDERWRITER] must verify that sufficient funds to cover any gift

    used in qualifying the borrower have been transferred to the

    borrower''s account, or will be documented as received by the closing

    agent at the time of closing.

    '
  type: do
  audit_question: For every VA loan in which gift funds are used by the borrower for any portion of the transaction, can [UNDERWRITER] evidence verification that sufficient gift funds were transferred to the borrower's account, or documented as received by the closing agent at closing, with acceptable documentation (deposit evidence, donor check/electronic transfer copy, or Closing Disclosure showing receipt) retained in the loan file?
  workflow_phase: origination
  owner_role: underwriter
  secondary_owner_role: closer
  cadence: per_loan
  consequence: ''
  tags:
  - round-b
  - regulator-direct
  - va
  - m26-7
  - ch04
  - gift-funds
  - asset-verification
  - promoted
  primary_source:
    tier: 1
    authority: "VA Lender Handbook M26-7 Chapter 4 — Credit Underwriting"
    source_class: va-handbook-m26-7
    source_url: https://benefits.va.gov/WARMS/M26_7.asp
    snapshot_id: 84a199d5bffee03b
    fetched_at: '2026-05-23T01:50:00Z'
    content_hash: sha256:ed2c25537e999a4e2d8f0edd102b19b58213237b1a9caa927fddfca170b14a9c
    paragraph_quote: 'The lender must verify that sufficient funds to cover the gift have been '
    drafter_attestation: "Copied verbatim from VA Handbook snapshot 84a199d5bffee03b (M26-7 Ch. 4 — Gift Funds Verification) at 2026-05-23. Source PDF retrieved via Wayback Machine."
  promoted_at: '2026-05-23T02:02:18+00:00'
  promoted_from: va-m26-7-ch04-roundb-v1.yaml
  program_review: Does the program ensure gift funds used in qualifying are verified as transferred to the borrower's account or documented as received by the closing agent at closing, with acceptable documentation retained?
  file_review: Spot-check files using gift funds; confirm transfer/receipt evidence (deposit evidence, donor check/transfer copy, or CD showing receipt) is in the file.
  judgment: false
- id: va-m26-7-ch04-mcc-provide-to-va
  canonical_id: va-m26-7-ch04-mcc-provide-to-va
  section: "VA M26-7 Ch. 4 — Mortgage Credit Certificate (MCC)"
  description: 'Where a Mortgage Credit Certificate (MCC) is in play, [UNDERWRITER]

    must provide a copy of the MCC to VA with the loan package,

    including documentation verifying any program expenses charged by

    the local government entity (as listed on the Closing Disclosure)

    and the percentage used to calculate the tax credit (and the amount

    of indebtedness, if applicable).

    '
  type: do
  audit_question: For every VA loan in which a Mortgage Credit Certificate is used to qualify the borrower, can [UNDERWRITER] evidence that a copy of the MCC was provided to VA with the loan package, together with documentation of any program expenses (on the CD) and the certificate's tax-credit percentage and indebtedness amount?
  workflow_phase: origination
  owner_role: underwriter
  secondary_owner_role: closer
  cadence: per_loan
  consequence: ''
  tags:
  - round-b
  - regulator-direct
  - va
  - m26-7
  - ch04
  - mcc
  - tax-credit
  - promoted
  primary_source:
    tier: 1
    authority: "VA Lender Handbook M26-7 Chapter 4 — Credit Underwriting"
    source_class: va-handbook-m26-7
    source_url: https://benefits.va.gov/WARMS/M26_7.asp
    snapshot_id: 84a199d5bffee03b
    fetched_at: '2026-05-23T01:50:00Z'
    content_hash: sha256:ed2c25537e999a4e2d8f0edd102b19b58213237b1a9caa927fddfca170b14a9c
    paragraph_quote: "the borrower’s mortgage interest payment. Lenders must provide a copy of "
    drafter_attestation: "Copied verbatim from VA Handbook snapshot 84a199d5bffee03b (M26-7 Ch. 4 — MCC) at 2026-05-23. Source PDF retrieved via Wayback Machine."
  promoted_at: '2026-05-23T02:02:18+00:00'
  promoted_from: va-m26-7-ch04-roundb-v1.yaml
  program_review: Does the program ensure that, where an MCC is used to qualify, a copy of the MCC is provided to VA with the loan package, including program-expense documentation (on the CD), the tax-credit percentage, and indebtedness amount?
  file_review: Spot-check MCC files; confirm the MCC copy and supporting documentation accompanied the VA loan package.
  judgment: false
_promotion_history:
- promoted_at: '2026-05-23T02:02:18+00:00'
  candidate_path: obligations\_remediation\_round_b_drafts\va-m26-7-ch04-roundb-v1.yaml
  candidates_promoted: 3
  candidates_skipped_existing: 0
