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Topic 6. Lender Responsibilities Under LAPP
June 28, 2010, Change 14
This section has been updated to add subsection lettering and to make minor grammatical edits.
a. Due Diligence
Lenders are expected to exercise due diligence in processing LAPP cases and are responsible for complying with all applicable:
VA policies and procedures,
VA regulations, and
statutory requirements.
VA considers due diligence to be care which is properly expected from, and ordinarily exercised by, a reasonable and prudent lender who is entirely dependent on the subject property as a security to protect their investment.
b. What LAPP Lenders Can Expect
In assuming the responsibilities involved with processing an appraisal under LAPP and subsequently underwriting the VA loan on the automatic basis, the lender has reasonable certainty that the VA Form 26-1899, Loan Guaranty Certificate, will be issued by VA, except in cases of fraud or willful material misrepresentation by the lender.
Reference: See Chapter 17, Section 4.
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c. LAPP Privilege
LAPP authority is a privilege delegated to lenders at VA’s discretion. Lenders maintain this privilege by complying with all applicable LAPP- related requirements.
If VA finds proper cause, the privilege extended to lenders under LAPP may be:
amended,
suspended, or
withdrawn.
Reference: For more information, refer to Chapter 17.