VA calculated the one-time technology costs utilizing the amount of time estimated to develop a custom disclosure form (either through existing LOS software or via a third-party contract). The wage burden was calculated as a composite wage, with weighting based on information provided by various industry professionals. Mean values from the BLS Occupational Employment and Wages data were used to estimate a composite wage as 5% Compliance Officer (occupation code 13-1041) at $/hour, 5% Lawyer (occupation code 23-1011) at $/hour, and 90% Computer Occupations (occupation code 15-1100) at $/hour, for a composite wage of $.
VA estimated a high annualized cost of $703,520 and a low annualized cost of $140,704. VA therefore estimates that the average cost to be $422,122.
Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (RFA), imposes certain requirements on Federal agency rules that are subject to the notice and comment requirements of the Administrative Procedure Act (APA), 5 U.S.C. 553(b). As previously discussed, VA has found urgent and compelling circumstances to waive those requirements do exist. Therefore, the requirements of the RFA applicable to notice and comment rulemaking do not apply to this rule.
Nevertheless, VA does not anticipate that this interim final rule will have a significant impact on small business lenders. The Small Business Administration (SBA) states that a mortgage lending business (NAICS code 522292) is small if annual receipts are less than $38,500,000. See 13 CFR . Utilizing FY2017 annual lender data and financial information, VA estimates approximately 22 percent (or 324) of its lenders qualify as a small business; of those who participate in VA cash-out loans, VA estimates 20 percent (or 238) of its lenders qualify as a small business. Of the 238 small business lenders who participate in VA cash-out loans, VA notes that 90 percent (216 lenders) completed no more than 20 VA cash-out loans in FY2017, suggesting that the impact of the statute and this regulation on their lending business will be minimal. In that regard, given that VA represents only 10 percent of the national mortgage market, it would be difficult for a small business to rely solely on VA loans in its portfolio. In fact, a sampling of VA small business lenders’ websites shows that they all offer the full range of conventional, FHA, and VA loan products.
Relying on its industry knowledge, VA assumes that average loan volume for a one-person lending shop would be approximately 120 loans per year (or 10 loans per month). As such, even if such a lender were to no longer make any VA cash-out loans, it is likely this would represent no more than 20 percent of portfolio for the year. VA believes this is even too conservative of an estimate as its own lender statistics show that for most of its small business lenders (213 out of 238 lenders), VA cash-out loans represent less than half of their VA portfolio. For those whose VA portfolio is majority cash-out refinances, only six lenders completed more than 20 VA cash-outs in FY2017.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance number and title for the program affected by this document is , Veterans Housing-Guaranteed and Insured Loans.
- Individuals with disabilities
- Loan programs-housing and community development
- Loan programs-veterans
- Manufactured homes
- Mortgage insurance
- Reporting and recordkeeping requirements
The Secretary of Veterans Affairs approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Robert L. Wilkie, Secretary, Department of Veterans Affairs, proceed the link right now approved this document on , for publication.