VA Loan Rules on “Duplicate Fees”
The VA loan program has a set of rules and guidelines for lenders on the fees and charges a veteran borrower may–and may not–pay as part of the expense of buying a home with a VA guaranteed mortgage.
One important rule involves how the VA views “duplicate fees”, which are expenses that have already been paid in one form or another but billed a second time.
For example–when the VA requires a flood zone determination on a property, can the lender charge each loan applicant for this determination individually? Or once that fee has been paid one time, is that fee considered “paid” unless a new determination is required/performed?
VA loan rules say specifically that a lender cannot charge twice for a service paid for once in such cases.
Chapter Eight of the VA Lender’s Handbook states clearly that, “the borrower may not pay a duplicate fee for services that have already been paid for by another party.” Chapter Eight lists some examples of this so there can be no ambiguity:
- An appraisal is completed on a property and paid for by a prospective purchaser, but the sale is never completed.
- A second purchaser applies for a loan before the validity period of the Notice of Value (NOV) expires. The lender uses the same NOV. The lender may not charge the second purchaser an appraisal fee if no second appraisal is ordered.
- A survey or flood zone determination, if the lender elects to use an existing survey or flood determination.
Those examples are reprinted directly from Chapter Eight, which also states that the Lender’s Flat Fee (1%) is applicable for “The lender’s flat charge is intended to cover all of the lender’s costs and services which are not reimbursable” as what the VA terms “itemized fees and charges.”
Borrowers with questions on how this policy applies specifically to their transaction or to specific expenses as part of that transaction should get advice directly from the VA by calling 1-800 827-1000.
Do you have questions about VA home loans or refinancing loans? Ask us in the comments section.