Check your refinance
Six conditions federal law sets, ten questions you can answer yourself
If your servicer changed the terms of the existing loan instead of replacing it with a new refinance, use Check your mortgage relief file instead.
If a lender replaced your VA loan with a refinance, federal law and VA rules set conditions that can be checked against your closing papers. Start by identifying the old loan and the new loan correctly. A fixed-to-fixed refinance, a fixed-to-adjustable refinance, and an adjustable-to-fixed refinance do not use the same rate-direction rule.
FIRST QUESTION · BEFORE THE MATH
WHO / WHAT / WHEN / WHERE / WHY
What kind of refinance was this?
The direction of the rate change matters. Write down the old loan type and the new loan type before you compare percentages.
- WHO
- The veteran borrower and the lender/issuer that made the refinance. VA guarantees or insures the loan and sets program requirements.
- WHAT
- Identify whether the old loan was fixed or adjustable, and whether the new loan is fixed or adjustable. Then apply the rule for that direction.
- WHEN
- The closing date matters because you need the rule version in effect then. The first payment due date and six consecutive payments matter for seasoning.
- WHERE
- Use the old Note, new Note, Closing Disclosure, payoff statement, payment history, and lender comparison disclosures. Copy numbers from documents, not memory.
- WHY
- If the loan type is classified backward, the rate test can be backward too. That can turn a valid comparison into a false alarm—or hide a real mismatch.
RATE DIRECTION · PLAIN SPEAK
Old fixed → new fixed: section 3709 uses a 50-basis-point minimum reduction.
Old fixed → new adjustable: section 3709 uses a 200-basis-point minimum reduction.
Old adjustable → new fixed: VA’s IRRRL regulation separately lists this as a qualifying path. It is not the section 3709(b)(3) 200-basis-point direction.
What a mismatch means
A number that does not reproduce is a calculation question. A record that appears inconsistent with the rule is a possible compliance issue. Do not call it a documented violation until the correct rule version, loan type, dates, documents, and failure are established.
REFINANCE RULES
THE LAW
The six conditions federal law sets
Every one can be checked from your own closing papers.
Congress wrote these conditions in 2018 to stop lenders refinancing the same veteran again and again for a small rate cut and a new round of fees.
A VA Interest Rate Reduction Refinance Loan, an IRRRL, replaces an existing VA loan with a new refinance. The exact benefit/rate test depends on the old and new loan types and the other statutory and regulatory conditions. IRRRLs are designed to be streamlined; that speed is also why Congress added anti-churning requirements in 2018. The Protecting Veterans from Predatory Lending Act, section 309 of Public Law 115-174, created 38 U.S.C. 3709. Congress amended the waiting period in 2019 with Public Law 116-33.
DOCUMENTED FACT S172
The waiting period is written into the statute itself. A refinance “may not be guaranteed or insured under this chapter until the date that is the later of” these two dates, whichever falls later:
“the date on which the borrower has made at least six consecutive monthly payments on the loan being refinanced”
“the date that is 210 days after the first payment due date of the loan being refinanced.”
38 U.S.C. 3709(c)
VA’s own guidance says a failure on that point cannot be repaired afterwards.
“Due to the nature of the loan seasoning requirement, remedial action is not possible in cases where the loan that was refinanced was not properly seasoned.”
VA Circular 26-19-22
DOCUMENTED FACT S174
THE SIX CONDITIONS
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Seasoning
Six consecutive monthly payments on the old loan, and 210 days since that loan’s first payment due date, whichever comes later.
38 U.S.C. 3709(c). S172
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Rate reduction
Old fixed → new fixed: “the refinanced loan has a mortgage interest rate that is not less than 50 basis points less than the previous loan.” Fifty basis points is half a percentage point. Old fixed → new adjustable: the statute uses 200 basis points. Old adjustable → new fixed is a separate regulatory IRRRL path under 38 CFR 36.4307(a)(3); do not apply the 200-basis-point label backward.
38 U.S.C. 3709(b)(2) and (b)(3). S172
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Fee recoupment
The lender must certify a recoupment period to VA, and “all of the fees and incurred costs are scheduled to be recouped on or before the date that is 36 months after the date of loan issuance,” through lower monthly payments. Taxes, escrow amounts and the VA funding fee are left out of that sum.
38 U.S.C. 3709(a). S172
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Net tangible benefit
The lender must give the borrower a net tangible benefit test. The regulation separately requires the refinance to satisfy one of the alternatives in 38 CFR 36.4307(a)(3). A lower monthly principal-and-interest payment is one path; the same paragraph also lists alternatives including a shorter term, a fixed-rate loan replacing a VA-guaranteed adjustable-rate mortgage, certain energy-efficiency payment changes, or advance VA approval where the new loan is necessary to prevent imminent foreclosure.
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Fee limits
The new loan may be no more than the balance being refinanced, “plus closing costs authorized by § 36.4313(d) and a discount not to exceed 2 percent of the loan amount.”
38 CFR 36.4307(a)(4)(i). S173
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Two comparison statements
“Lenders should twice present the Veteran with a comparison of the refinance loan to the loan being refinanced,” once within three business days of the application and again at closing, each showing both loans’ rates, payments and the recoupment period in months.
VA Circular 26-19-22, section 3.d. S174
Every quotation above was read against the published text on August 21, 2026. The audit worksheet these rules are drawn from verified the same citations on June 11, 2026.
OLDER LOANS
THE LAW
Which rules apply to an earlier refinance
The statute, the regulation and the circular, read together.
VA never rewrote its regulation to match the statute. If your refinance closed before the rules were updated, three documents govern it together, and VA says its circular controls where they conflict.
VA has not rewritten 38 CFR 36.4307 to take in section 3709. Circular 26-19-22, dated August 8, 2019, states that until VA publishes a final rule updating its IRRRL regulations, where regulatory provisions unequivocally conflict with the circular, the circular is VA’s interpretation of current policy. The working framework is therefore the statute, the regulation and the circular read together.
GINNIE MAE
Ginnie Mae, which pools these loans for investors, carries its own version of the waiting period: six consecutive monthly payments on the loan being refinanced, and a first payment due date on the new loan no earlier than 210 days after the first payment due date on the old one, for pools issued on or after April 1, 2018. A lender that closes a refinance earlier than that has trouble selling it into a pool.
S175 PENDING CITATION
The Ginnie Mae page did not return readable text to our fetcher on August 21, 2026, so its document number, title and date are not confirmed and the source row says so. The rule as stated here comes from the audit worksheet, not from that page.
SELF CHECK
READER CHECK
Ten questions your own paperwork answers
None of them needs a lawyer to answer.
A flag on any one of these means the file is worth showing to a lawyer. Pull two documents before you start: the Closing Disclosure from the refinance, and the Note or first billing statement from the loan it replaced. Page 2 of a Closing Disclosure carries the fees.
What direction did the rate move?
Write “old fixed → new fixed,” “old fixed → new adjustable,” or “old adjustable → new fixed.” For fixed → fixed, 3.25 percent down to 2.75 percent is a 0.50-point reduction; 3.0 percent down to 2.75 percent is only 0.25. For fixed → adjustable, section 3709 uses a 2.00-point reduction. ARM → fixed is a separate regulatory path, so do not use the 2.00-point rule just because one side is adjustable.
How soon after your original loan did the refinance close?
Count the days from the first payment due date on the old loan to the refinance closing date. Fewer than 210 days, or fewer than six monthly payments made, is a flag. Within two to four weeks of the 210 day mark, write the dates down.
Find “Total Closing Costs” on page 2 of your refinance Closing Disclosure.
Divide that number, minus the VA funding fee, taxes and escrow deposits, by your monthly payment savings. More than 36 is a flag.
Did your loan balance go up when you refinanced?
Compare the payoff amount of the old loan to the new loan amount. An increase means fees were rolled in. Check them against question 3.
Did your loan term start over?
Twenty nine years left, replaced by a new thirty year loan, is not a violation on its own, but it changes what the loan costs over its life. Note it.
Did the lender call, mail or email you first to pitch the refinance?
Keep every one of those solicitations.
Were you told it was an easy or no cost process, with no appraisal, no income documents and no credit check?
That is how this refinance is allowed to work. It is also the standard sales pitch. Write down exactly what was promised, then compare it with what the Closing Disclosure shows.
Did you receive a side by side comparison of the two loans, twice?
Once within about three business days of applying, and again at closing, each showing both loans’ rates, payments and a recoupment period in months. If you never saw one, that is a flag.
Was anything you were promised out loud different from the final documents?
Rate, fees, payment, “no cost.” Write down what you remember, with dates.
Has the same lender refinanced you, or tried to, more than once?
Repeat refinancing is the pattern the 2018 law was written to stop.
Every question here comes from the statute, the regulation and VA’s circular, not from any one family’s file.
THE ARITHMETIC
READER CALCULATION
How to work out the recoupment period
Three lines of arithmetic, and one number that matters.
- Monthly savings
- equals the old monthly principal and interest payment minus the new monthly principal and interest payment.
- Recoupment months
- equals total fees, closing costs and expenses, not counting taxes, escrow deposits and the VA funding fee, divided by monthly savings.
- More than 36 months is a flag
- The statute requires all fees and incurred costs to be scheduled for recoupment on or before 36 months after the loan is issued.
- If your payment did not go down
- For a refinance subject to section 3709(a), recoupment is calculated through lower regular monthly payments. If your payment did not go down, mark it for review rather than jumping to a legal conclusion; confirm the refinance type, cash-out status, rule version, and lender calculation.
This is an organizing tool, not legal advice. Every question here is written to be reviewed with an attorney. Most of the documents that settle these questions sit in the lender’s loan file, and you can ask for that file in writing.
VA’S OWN AUDITOR
AUDIT FINDINGS
What the Inspector General found
The rules were on the books. The check on them was not.
VA could not confirm lenders were meeting three of these rules, and VA’s own Inspector General said so in writing, three years before this crisis.
In August 2023 the VA Office of Inspector General published an audit of these refinances, report 21-01295-149. It examined fiscal year 2020, the year the product multiplied.
“In fiscal year (FY) 2020, VA reported a 598 percent increase in the number of IRRRLs from the previous year.”
VA Office of Inspector General, report 21-01295-149
On the three requirements the law turns on, fee recoupment, net tangible benefit and loan seasoning, the audit says:
“Prior to these new controls, LGY was unable to sufficiently ensure those three requirements were met.”
VA Office of Inspector General, report 21-01295-149
LGY is the Loan Guaranty Service, the office inside VA that oversees VA home loans. On the reporting lenders owe VA after a loan closes, the audit says:
“lenders did not comply, and LGY’s controls were not sufficient for obtaining compliance.”
VA Office of Inspector General, report 21-01295-149
WHAT IT COST BORROWERS
The audit put figures on what that cost borrowers: “the OIG estimated that at least 3,200 FY 2020 borrowers were overcharged $1.6 million,” and, separately, that “approximately 18,400 of the FY 2020 borrowers (21 percent) were potentially overcharged a total of $3 million” in unsupported, unallowable or unreasonable closing costs.
DOCUMENTED FACT S178
THE 2019 AUDIT
Four years earlier the same office made a related finding about a different part of the same service. Report 18-03979-204, dated September 30, 2019, found that “the Loan Guaranty Service did not always provide sufficient oversight to ensure borrowers in default received the needed assistance,” and estimated, from a sample review of 200 loans, that “14 percent of loans had at least one oversight deficiency.” All four recommendations are recorded as closed and implemented, the last of them on June 23, 2020.
DOCUMENTED FACT S176
LIMITS
LIMITATIONS
What these audits do not tell you
Both are about VA’s controls, not about any one company.
What these audits do not establish
- The 2023 figures are statistical estimates projected from audit samples of fiscal year 2020 loans. They are not counts of identified people. The $1.6 million estimate is projected from 19 sampled loans.
- The OIG made nine recommendations and VBA agreed with all nine. Three were flagged as needing a legal opinion from VA’s Office of General Counsel before a disagreement about closing costs could be settled.
- The 2019 audit reviewed a sample of 200 loans and covered default resolution, not refinancing. Closing a recommendation records that VA satisfied the OIG it had acted. It does not record what happened to families afterwards.
- Neither audit is about any one company. Both are about whether VA’s own controls worked.
Report 21-01295-149 was published August 23, 2023. Report 18-03979-204 was published September 30, 2019. Both were read against the published documents on August 21, 2026.