VA loans

VA Loan Funding Fee Exemptions Part Two

December 22, 2011

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VA Loan Funding Fee Exemptions Part Two

In our last blog post, we discussed VA loan funding fee exemptions and how those exemptions must be verified by the lender. Thanks to changes in how the Department of Veterans Affairs processes VA Loan Certificates Of Eligibility, lenders can now determine VA funding fee exemption status for many borrowers by checking the COE.

This process doesn’t work in all cases–the lender may be required to contact the nearest VA Regional Loan Center for more information, or if a borrower has not gotten VA recognition of his or her disability claim at the time the COE was issued, there may be a requirement for more action at a later date.

Some borrowers aren’t eligible for VA loan funding fee exemption–the exemptions are intended for those eligible to get VA compensation for a service-connected disability. In cases where the VA loan applicant is not exempt, that status will appear on the Certificate of Eligibility, and may be accompanied by the following conditions, according to VA Circular 26-11-11:

“For COEs with a “NON EXEMPT” status, the following “CONDITIONS” may appear:

(1)  Funding Fee – Veteran is not exempt from Funding Fee.

(2)  Funding Fee – Veteran is not exempt from Funding Fee due to receipt of non- service-connected pension.  LOAN APPLICATION WILL REQUIRE PRIOR APPROVAL PROCESSING BY VA.”

Some VA Certificates of Eligibility may come with a condition simply stating, “Contact RLC”. In such cases the lender must fax a copy of VA Form 26-8937 to the RLC of jurisdiction in that area.

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