On September 2, 2021 (updated), DocMagic will be adding a new audit to its Automated Compliance System for U.S. Department of Veterans Affairs (“VA”) guaranteed loans.
The audit will provide a warning for clients if the origination fee exceeds one percent (1%) of the loan amount and if non-permissible fees are indicated as paid by the borrower. VA regulations do not limit the payment of fees by other parties.
Under VA regulations provided in Chapter 8 of the VA Lender’s Handbook, a veteran can pay, excluding special provisions for Construction, a maximum of:
- Reasonable and customary amounts for “Itemized Fees and Charges” designated by VA, plus
- A one percent (1%) flat fee charge by the lender, and
- Reasonable discount points
The one percent (1%) flat fee will be based on the principal amount plus the funding fee, if the funding fee is being paid from the loan proceeds. There is an exception for VA Interest Rate Reduction Refinance (“VA IRRRL”) loans, which must use the calculation in VA Form 26-8923 for the origination fee.
There is no action needed from our clients. Once released, users will automatically receive a warning audit when applicable. If you have any questions regarding this information, please contact DocMagic’s Compliance Department.
