VA Issues Funding Fee Update
VA Circular 26-11-18 provides some much-needed new information regarding the VA loan funding fee issue, which has been a source of concern for many veteran VA loan applicants trying to purchase homes within the window of proposed funding fee changes.
According to the circular, “H.R. 674 has passed the Senate, and is under consideration in the House of Representatives. This legislation would keep funding fees at their present levels through Fiscal Year 2016. VA expects the House of Representatives will pass this bill, and that it will be sent to the President for signature during the week of November 15, 2011.”
What does that potentially mean for VA loan applicants? The original VA loan funding fee structure was scheduled to be revised on November 18 to feature new, lower VA loan funding fees. If H.R. 6745 is signed into law by the President, those changes would not occur and VA loan funding fees would remain at their current levels. But there’s another issue–what if the bill is signed into law, but only after the November 18, 2011 deadline passes for the lower VA loan funding fee changes?
According to VA Circular 26-11-18, “If H.R. 674 is not signed by November 18, 2011, funding fees will decrease as scheduled for a short period of time. If funding fees do reset to the lower amounts, VA’s Funding Fee Payment System will collect only the statutory lower amount.”
“Lenders who disclosed higher funding fees on closing documents based on anticipation of Congressional action, will have to refund the difference to the Veteran borrower, either in the form of a principal curtailment for financed funding fees, or a check for funding fees paid at closing.”
That is a very important point to consider–the VA Circular is saying that in effect, there is a refund provision based on the actual VA loan funding fee due by law at the time the funding fee must be paid by the borrower. No “grandfather” fees may be collected–again, only the actual amount required by law when the fee is paid.
The VA addresses this issue further, stating, “Once the bill becomes law, funding fees will revert to their current levels. VA expects all lenders to remit the correct funding fees on these loans, regardless of closing document disclosures.”
“VA will not waive the difference in fees between the lower November 18, 2011, fees and the higher H.R. 674 fees in these situations.” That is a very important detail to focus upon–the fees established by law, regardless of lender paperwork statements, are the fees required.