VA Automatic Lenders (Supervised and Nonsupervised)

Updated 2026-05-17

A VA Automatic Lender is a financial institution authorized by the Department of Veterans Affairs (VA) to underwrite and close VA-guaranteed loans without requiring prior VA approval for each individual loan. This designation, also known as "Authority to Close Loans on an Automatic Basis," signifies a higher level of trust and delegated authority from the VA, significantly streamlining the loan origination process. The VA encourages lenders with this authority to use it to the maximum extent possible.

The VA categorizes lenders participating in its loan guaranty program into two primary types: Supervised Lenders and Nonsupervised Lenders. Both types can obtain automatic authority, but the path to obtaining and maintaining it differs based on their primary regulatory oversight.

General Characteristics of Automatic Authority

• Purpose: To expedite the processing of VA loans by delegating certain approval responsibilities to experienced and compliant lenders.
• Scope: Lenders with automatic authority have nationwide authority to close loans automatically, provided they comply with ongoing requirements.
• Exceptions: Even with automatic authority, certain types of loans must always be submitted to VA for VA Prior Approval Loans. These include joint loans, loans to veterans with fiduciaries, delinquent Fannie Mae to Fannie Mae Refinances, and most manufactured home loans.
• LAPP Authority: The Lender Appraisal Processing Program (LAPP) authority is granted exclusively to automatic lenders. This means only lenders with existing delegated authority for loan underwriting can further qualify for the delegated appraisal review process under LAPP. The geographic extent of a SAR's LAPP authority is tied to the states in which the lender has authority to close loans under the automatic procedure.
• Comparison: This concept is analogous to an Federal Housing Administration (FHA) with Direct Endorsement authority, where a government agency delegates significant processing responsibilities to qualified lenders.

Supervised Automatic Lenders

A VA Supervised Lender is a financial institution subject to mandatory periodic examination and supervision by a federal or state regulatory agency. This oversight provides a recognized level of financial and operational soundness, leading to an inherent grant of automatic authority.

Characteristics and Requirements:

• Automatic Authority: Supervised lenders are automatically granted the privilege to close VA loans without prior VA approval, except for specific types of loans that always require prior approval.
• Regulatory Oversight: Their primary regulatory oversight comes from their federal or state supervisory agency.
• Examples of Supervising Entities:
  • The Board of Governors of the Federal Reserve System
  • The Federal Deposit Insurance Corporation (FDIC)
  • The Comptroller of the Currency
  • The National Credit Union Administration (NCUA)
  • The Farm Credit Administration
  • Other examples include Federal Savings Banks, National Banks, State Chartered Banks, Insurance Companies, Credit Unions, Savings and Loan Associations, and Private banks. A state acting as a lender is also considered supervised.
• VA Recognition: Lenders directly supervised by these federal entities are not required to request recognition from VA. However, a lender not directly supervised by one of these federal entities may request VA recognition as supervised if it is a wholly-owned subsidiary or affiliate of a VA-recognized supervised lender.
• Agent Recognition: Supervised lenders must obtain VA recognition for any Mortgage Brokers they use and submit annual renewal information and fees for these agents.
• Corporate Changes: Mergers and acquisitions involving supervised lenders require specific submissions and approvals from the VA.
• Quality Control: They are expected to maintain a quality control system that ensures compliance with VA requirements.

Nonsupervised Automatic Lenders

A VA Nonsupervised Lender is any lender that does not meet the criteria to be classified as a supervised lender. Unlike supervised lenders, nonsupervised lenders do not automatically have the authority to close VA-guaranteed loans without prior VA approval.

To gain the ability to close loans on an automatic basis, a nonsupervised lender must apply for and be formally granted VA Automatic Authority by the VA, at which point they become a Nonsupervised Automatic Lender.

Characteristics and Requirements for Automatic Authority:

• Initial Status: Initially, a nonsupervised lender must submit all loans (except certain non-delinquent IRRRLs) to VA for VA Prior Approval Loans. This "prior approval" process means each loan must be individually reviewed and approved by the VA before closing.
• VA Oversight: While not federally supervised, they are subject to direct oversight by the VA, including annual fees, quality control plan requirements, and periodic audits.
• Application Process: The application process is stringent and requires meeting specific criteria and submitting extensive documentation. Key requirements include:
  • Application Form: Submission of va-form-26-8736-application-automatic-authority.
  • Lender Experience: Demonstrating at least two years of active VA origination experience with a minimum of 10 VA loans closed in the past two years, or 25 VA loans if less than two years experience. Experience as an agent for an automatic lender can also count. (Note: Fannie Mae to Fannie Mae Refinances do not count towards this experience).
  • Qualified Underwriter(s): Nominating at least one full-time qualified employee as a va-approved-underwriter using va-form-26-8736a-underwriter-nomination. Underwriters must have specific experience (e.g., 3 years mortgage underwriting, with 1 year VA underwriting in the last 3 years) or hold an AMP/CRU designation from the Mortgage Bankers Association (MBA).
  • Financial Stability: Maintaining a minimum of $50,000 in va-working-capital-adjusted-net-worth or $250,000 in adjusted net worth, certified annually by a Certified Public Accountant (CPA).
  • Sanctions Review: No history of debarment, suspension, or other formal sanctions against the lender or its principal officers.
  • Certifications: The principal officer must certify compliance with various VA regulations, including not closing loans for affiliated entities without express VA approval, notifying VA of significant changes, and ensuring all automatic loans are reviewed by a VA-approved underwriter.
• Probationary Period: Newly approved nonsupervised automatic lenders are subject to a minimum one-year va-probationary-period during which VA closely reviews their performance.
• Agent Use: They may use agents, but specific rules apply to the recognition and identification of these agents.
• Corporate Changes: Changes in ownership or corporate structure require specific notification and approval from the VA.
• Ongoing Requirements: Lenders with automatic authority must maintain a quality control system, pay annual fees, and notify the VA of significant corporate changes.
• Sanctions: Non-compliance with VA requirements can lead to sanctions, including withdrawal of automatic authority or Limited Denial of Participation (LDP).

Limited Automatic Authority for IRRRLs

Any lender, even one without general automatic authority, can close an Fannie Mae to Fannie Mae Refinance automatically, provided the loan being refinanced is not delinquent. This is a specific, limited form of automatic authority.

Withdrawal of Authority

The VA can withdraw automatic authority for various reasons, including non-compliance, false certifications, or substantive errors.