The Department of Veterans Affairs (“VA”) has issued Circular 26-24-19, which details when a lender needs to provide an invoice or other documentation to support itemized fees and charges paid by a veteran on a VA-guaranteed loan.
Fees and charges that are not expressly permitted by VA may not be charged or paid by a veteran obtaining a VA-guaranteed loan. Chapter 8, Topic 2.c of the VA Lenders Handbook, provides that a veteran may pay a reasonable and customary amount for specific fees and charges that may be charged incidental to a loan, such as recording and title fees. The list of itemized fees and charges that are allowed are separate from the one percent fee a lender may charge.
Lenders may not charge veterans more than the actual amount of a fee or service performed and may not charge the veteran for services already paid for by another party. Any amount charged to a veteran for an itemized fee must be supported “with an invoice or other documentation that clearly identifies the transaction and verifies the fee and associated charge. Examples of acceptable documentation include a detailed invoice or a copy of a recorded deed. All documentation must identify the transaction and verify the fee being charged.
Lenders are required to retain this information in the loan file so it can be provided to the VA upon request for audit or review. If a lender is unable to support a charge with documentation, the amount must be refunded to the veteran and evidence of the refund must be retained in the loan file. Lenders may also provide a principal reduction if an overcharged fee was included in the loan amount, such as with an Interest Rate Reduction Refinancing Loan (IRRRL). Fees paid by others and fees included in the lender’s one percent are not subject to the requirement for documentation.
VA may authorize local fee variances to allow certain fees and charges to be paid by a veteran based on the location of a subject property. A list of the local fee variations is posted on the VA website. The list has been updated to no longer include maximum dollar amounts for most fees on the list. A temporary local variance was recently added to the list to allow veterans to pay reasonable and customary amounts for buyer-broker charges.
Circular 26-24-19 is effective for loans closed on or after January 1, 2025.
