A supervised lender is any lender that requires scheduled examinations and supervision by a Federal government agency. They are different from a nonsupervised lender in that they do not need VA approval to close or process their loans. While nonsupervised lenders have to send a number of documents to the VA to get approval for a loan, a supervised lender can do this automatically.
Some examples of supervised lenders include:
- Federal Savings Banks
- National Banks
- Farm Credit System Institutions
- State Banks
- Insurance Companies
- Credit Unions
- Private Banks
Like nonsupervised lenders, supervised lenders are under the authority of the VA Office of Jurisdiction. This office provides the supervised lender with all needed VA publications and materials. The VA Office of Jurisdiction is also the main contact with the supervised lender for all technical questions and requests for training. Unlike nonsupervised lenders, supervised lenders must be supervised by a Federal Government Agency. These agencies are responsible for performing routine examinations on the lenders within their jurisdiction.
The following are Federal Government Agencies that supervise lenders:
- The Board of Governors of the Federal Reserve System
- The Federal Deposit Insurance Corporation
- The Comptroller of the Currency
- The Office of Thrift Supervision
- The National Credit Union Administration
- The Farm Credit Administration
Supervised lenders do not require VA approval to use their own underwriters. Underwriters are allowed to underwrite automatically processed loans. If the lender were not supervised, they would have to submit an application to the VA to underwrite loans. Supervised lenders are also able to close loans in any state.
Other Options for Supervision
There are certain circumstances in which a lender does not necessarily have to be supervised by one of the Federal government agencies above to be considered supervised. The lender must first submit all required documents to the VA. The VA will make its decision based on the lender’s circumstances and submitted documents.
Circumstances in which lenders can be supervised by other agencies:
- The lender is a wholly-owned subsidiary or affiliate of a VA-recognized supervised lender
- The lender is examined and supervised by a state agency or a federal agency not previously listed
The VA’s decision is usually mailed to the lender in letter form. If the VA decides to allow the lender to receive supervision from a different agency, the lender is still subject to routine examinations.
Interested in applying for a home loan? Click here to start your application.