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Home > Ask The Get Out of Debt Experts > Bank of America Says I’m Not Eligible for VA Interest Rate Reduction Refinance Loan (IRRRL). – Edward

Bank of America Says I’m Not Eligible for VA Interest Rate Reduction Refinance Loan (IRRRL). – Edward

“Dear Steve,

VA Home loan for $125,000 + Line of Credit for $28,000 = Original basis of $153,000
Went to settlement on August 2007, no representative.
Country Wide Bank financed the loan.
Lost Job 2009 – Unemployed now and retired!
Had to rent property to pay mortage
Bank of America now has loan.
Loan is no longer a VA backed loan, It is now an FHA loan!
Unable to refinance
Under water by $70,000

I have tried several times to no avail, to refinance this loan, most recently with Wells Fargo Bank. I Just received a letter stating that they are unable to approve my application because “Not eligible for VA “IRRRL”” I have no idea what is IRRRL).

I contacted Bank of America several times looking for resolution, to no avail. It took them 2 years to contact me.

I was late a couple times with my mortage payment and when I contacted Bank of America, they referred to my mortage as “Dept Collection”, what is that and why am I being referred to as a “dept collection”, why not as late on my mortage?

I am confussed now, and dont know where to turn! I am not even sure what my question to you is!
I dont know where to turn, all I know is that something is not right with this loan and no one will to touch it!!

What can I do? Where should I go? Who can I contact?

Thank you,


Dear Edward,

The VA IRRRL is a Interest Rate Reduction Refinance Loan. According to Veterans Affairs to be eligible for the IRRRL you have to meet the following:

  • An IRRRL can only be made to refinance a property on which you have already used your VA loan eligibility. It must be a VA to VA refinance, and it will reuse the entitlement you originally used.
  • A Certificate of Eligibility (COE) is not required. If you have your Certificate of Eligibility, take it to the lender to show the prior use of your entitlement.
  • No loan other than the existing VA loan may be paid from the proceeds of an IRRRL. If you have a second mortgage, the holder must agree to subordinate that lien so that your new VA loan will be a first mortgage.
  • You may have used your entitlement by obtaining a VA loan when you bought your house, or by substituting your eligibility for that of the seller, if you assumed the loan.
  • The occupancy requirement for an IRRRL is different from other VA loans. For an IRRRL you need only certify that you previously occupied the home.

The VA also states:

  • No appraisal or credit underwriting package is required when applying for an IRRRL.
  • An IRRRL may be done with “no money out of pocket” by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.
  • When refinancing from an existing VA ARM loan to a fixed rate loan, the interest rate may increase.
  • No lender is required to give you an IRRRL, however, any VA lender of your choosing may process your application for an IRRRL.
  • Veterans are strongly urged to contact several lenders because terms may vary.
  • You may NOT receive any cash from the loan proceeds.

The underlying problems here are that it does not look like you meet the loan requirement since you do not have a VA loan and the property is not owner occupied and that creates a refinancing problem.

On the modification front I suggest you review the links below.

Mortgage Help

Be sure to first read How Not to Get Scammed by a Mortgage Loan Modification Company.

Debt-to-Income Calculator

First you’ll need to determine your current debt-to-income ratio. The target debt-to-income ratio under the Home Affordable Modification program is 31%. Use this free online DTI calculator.

Mortgage Modification Calculator

The mortgage modification eligibility calculator will ask you several questions and then show you which programs you may be eligible for.

The free mortgage modification calculator can be found here.

Free Mortgage Modification Help and Counseling

If you have questions about the process or eligibility you can call 888-995-4673 and get connected with an mortgage modification adviser for free. This help is provided by government subsidized HUD Housing Counselors and they can be a big help in navigating the modification process.

In order to assist you, the housing expert will need to gather some information from you. Have the following documents handy:

  • Information about your first mortgage, such as your monthly mortgage statement.
  • Information about any second mortgage or home equity line of credit on the house.
  • Information about the monthly gross (before tax) income of all household members contributing to pay the mortgage, including recent pay stubs if you receive them or documentation of income you receive from other sources.
  • Information about your savings and other assets.
  • Account balances and minimum monthly payments due on all of your credit cards.
  • Account balances and monthly payments on all your other debts such as student loans and car loans.
  • Your most recent income tax return.
  • It may also be helpful to have: A letter describing any circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.), if applicable.

You can also get free help and housing counseling from a local HUD approved counselor. You can find your local free housing counselor, here.

Contact Your Mortgage Company

Not sure if your mortgage company offers modification programs? Not all do. You can contact your mortgage company to ask them about mortgage modification programs you might be eligible for. Click here to find your mortgage company.

NPV Calculator

Want to know the net present value (NPV) of your home for the mortgage modification process? No problem, use the free NPV calculator to find out. The NPV calculator is right here.

The calculator can be used by homeowners who have been denied a HAMP modification because of their NPV result or can also be used by homeowners prior to applying for a HAMP modification to help them better understand the NPV evaluation.

No Advance Fees

The Federal Trade Commission has a Mortgage Assistance Relief Services Rule which prohibits advance fees for mortgage rescue services or mortgage modification help.

Please post your responses and follow-up messages to me on this in the comments section below.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • pol103

    Hi Steve, The inforomation you provided has been a great help to me, Thank you!

    As I noted in my first post, I had been trying to refinance this loan, and the Bank that I am working with to refinance my loan sent me a letter of ineligibility, because they could not according to B of A records determine that the loan was indeed a VA Loan.

    So, after reading your response to me I contacted B of A and learned from a customer rep that the loan was incorrectly listed as a conventional loan rather than a VA Loan.

    Am I entitled to some type of compensation because this loan was incorrectly labeled? Please note I have made several attempts to refinance.

    • Steve Rhode

      The clerical error issue might be a hard one to fight but it certainly is one to continue to point out to them to expedite the matter.

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