In Circular 26-24-19, the Department of Veterans Affairs (VA) sets forth documentation requirements for fees and charges that may be imposed on veterans in connection with VA-guaranteed home loans, other than the VA funding fee and flat lender charge of up to 1% of the loan amount. The requirements are effective for loans closed on or after January 1, 2025.
The VA significantly limits the fees and charges that may be imposed on a veteran in connection with a VA-guaranteed home loan. Information on allowable fees and charges is set forth in the VA Lenders Handbook, Pamphlet 26-7. The VA advises in the Circular that “[l]enders must support the amount charged to or paid by the Veteran with an invoice or other document that clearly identifies the transaction and verifies the fee and associated charge (example: a recorded deed that displays the cost of recordation).” Additionally, the VA advises that:
- Lenders may not charge the veteran more than the actual amount charged for the fee or service performed.
- Lenders may not charge the veteran for services already paid for by another party.
- Invoices must be maintained in the loan file and provided to VA in the event the loan is requested for audit or review.
- If the lender is unable to support the charge with an invoice, a refund is to be provided to the veteran. If an overcharge is refunded prior to a VA review, evidence of the refund must be maintained in the loan file and provided to VA on request.
As noted above, the invoice requirement does not apply to fees included in the lender’s flat charge of up to 1% if the amount. Additionally, the invoice requirement does not apply to fees in the “Seller-Paid” or “Paid by Others” columns on the Closing Disclosure.
The VA addresses in the Circular that it may, in advance, authorize local fee variances for additional fees and charges that may be imposed on and paid by the veteran based on the location of the subject property. The deviations are set forth in a State Fees and Charges Deviation List that the VA publishes. The VA advises in the Circular that effective immediately, it will no longer publish maximum dollar amounts for most fees and charges on the list.
The VA acknowledges that certain government mandated fees paid by veterans at closing may not be received by the state or municipality immediately at closing and, therefore, there will not be an invoice at the time. The VA advises that such fees that are specifically identified on the State Fees & Charges Deviations list do not require an invoice, but the lender may not charge more than the amount listed. For the fees and charges included on the State Fees & Charges Deviations list without a maximum dollar amount, the veteran may pay reasonable and customary amounts, provided that the fees and charges are supported by an invoice.
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