Mortgage Industry Trends

Time For Some VA Fee Changes?

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VA-fees-unchanged-since 1054-fordThe allowable fees and charges that a lender can charge a veteran are somewhat limited and they haven’t been changed since 1954. Think about it. What hasn’t changed since 1954? Wow, that’s a long time…

Presently, the VA allows specific third party charges which are required in connection with the loan. They also allow a lender to charge a flat 1% of the loan amount to cover all other costs and charges, including the settlement charges. For most loans, this does not cover all the costs.

So, the VA, at the urging of the real estate and lending industries and Veterans, is asking for comments on how these fees and charges may be updated.

Veteran home buyers have complained that the restrictive fee rules are detrimental to them as, in many cases, the seller is asked to pay for some or all of the restricted fees. Lenders can also raise rates to offset losses sustained from the unallowable fees/charges.

So, the VA is stepping up to the plate and asking what can be done to update their fee policy and make their program more competitive with other lending options. However, they still want to protect Veterans from excessive, unreasonable fees and charges.

The VA has put forth 11 questions for response and comment. Nice thing is, unlike the proposals put forth by other governmental agencies, the VA proposal is short and to the point.

VA asks direct questions, such as:

  • Under the current rule, the VA distinguishes between a “fee” and a “charge” but does not define the terms. Should the VA eliminate the distinction? If not, how should VA define the terms?
  • What other lending programs, whether public or private, might the VA consider as models in considering amendments to the VA’s charges and fees rule?
  • How should the VA identify which closing costs are acceptable for the veteran to pay, which are acceptable for another party but not a veteran to pay, and which, if any, should be prohibited?

These are just a few samples of VA’s questions.

The VA allowable fee rules have been a problem for many lenders and one of the reasons why some lenders do not offer VA financing. Here’s a chance to help bring this very worthwhile program into the modern age so it more accurately reflects what’s customary in the market and can better serve more of those who have served their Country.

If you’re dissatisfied with the fees and charges that the VA presently allows on their guaranteed loans, now’s your chance to speak up and do something about it. Let your voice be heard to help the VA, Veterans, Lenders, Realtors, Builders, the housing market, and the economy. A few comments can sure go a long way.

Are you ready for a change? Go tell it to the VA.

Michael Vitali

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.
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Michael Vitali

About Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.
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