Mitchell6024/quickb · Datasets at Hugging Face

id stringlengths 36 36	text stringlengths 1 400	source stringclasses 1 value
b7a028d8-0c18-497c-ada8-0d048493934d	Hybrid ARMs: If the initial contract interest rate remains fixed for less than 5 years, the initial adjustment is limited to a maximum increase, or decrease of one percentage point and the interest rate increase over the life of the loan is limited to five percentage points.	VA_Guidelines.txt
53bfb148-b7c6-4c73-9c5b-11504f097abc	If the initial contract interest rate remains fixed for 5 years or more, the initial adjustment will be limited to a maximum increase or decrease of two percentage points and the interest rate increase over the life of the loan will be limited to six percentage points. c.	VA_Guidelines.txt
fba51d14-b253-479c-a09a-6aafbbfae23b	Underwriting an ARM ARM loans that may adjust after 1 year must be underwritten at one percentage point above the initial rate.	VA_Guidelines.txt
702a0fd3-a7b3-4846-97fe-03629723d162	Hybrid ARMs with a fixed period of 3 or more years may be underwritten at the initial interest rate 7-31 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 7: Loans Involving Temporary Interest Buydowns Change Date: July 27, 2023 · Subsection b	VA_Guidelines.txt
18559ea3-2040-4956-b81c-a67ab37404a5	. has been updated to clarify when a temporary buydown may be used in conjunction with a VA-guaranteed loan and how escrowed funds are to be held. · Subsection c. has been updated to clarify buydown payment schedules. · Subsection d. has been updated to clarify how to underwrite loans involving a temporary buydown. · Subsection e	VA_Guidelines.txt
987e552e-740d-47f2-a68a-7af186a41b8e	. · Subsection e. has been added to include information on when a temporary buydown is considered a seller concession. a.	VA_Guidelines.txt
15afe4a7-eeab-4b8e-8227-6c57fb84738a	Description VA generally allows two types of temporary interest rate buydowns. One is a marketing tool, where builders, sellers, or lenders establish and fund escrows to temporarily reduce a borrower’s loan payments during the initial years of the loan. A second is where a borrower funds an escrow account for herself/himself as a financial management tool.	VA_Guidelines.txt
7af6d454-b207-4476-b7cf-fcb70ec0f261	Lenders may not fund or establish a temporary buydown by charging an above market interest rate. VA can guaranty loans involving temporary interest rate buydowns, provided that the loan meets all other applicable requirements.12 In VA’s home loan programs, temporary interest rate buydowns can only be used in conjunction with fixed rate loans. b.	VA_Guidelines.txt
b5b0f4a1-e559-4f7c-878c-adf5e307200f	Escrow Agreement Funds must be held in a segregated escrow account. The lender is responsible for ensuring that the escrowed funds are legally protected and used only for payments due under the note. The funds may not be used to pay past due monthly loan payments, or for any other purpose. If the loan is foreclosed or prepaid, the funds must be credited against the Veteran’s indebtedness.	VA_Guidelines.txt
53eb7e2a-c41b-4eda-9f19-560b4192c41f	The funds may not revert to the party that established the escrow. If the property is sold subject to, or on an assumption of the loan, the escrow must continue to pay out on behalf of the new borrower. It is the lender’s responsibility to review and determine the acceptability of the buydown and ensure that it complies with all applicable federal and state laws.	VA_Guidelines.txt
fa0dd055-4559-4284-b362-a9b60e9591c2	Lenders must provide the Veteran with a clear, written explanation of the buydown agreement. A copy of the buydown and escrow agreements, signed by the Veteran, must be maintained in the lender’s loan file.13 Lenders must submit such agreements to VA if the loan is selected for review. Continued on next page 12 See 38 U. S.	VA_Guidelines.txt
2282b051-95f2-4320-a419-42c3ad3fbe5d	Continued on next page 12 See 38 U. S. Code § 3703(c) (authorizing guaranteed loans with interest rates agreed upon by the Veteran and lender). 13 38 C. F. R. 36.4333. 7-32 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 7: Loans Involving Temporary Interest Buydowns, continued c.	VA_Guidelines.txt
2b5a20c3-e9a8-4f04-929f-63f6d3c6cc48	Buydown Payment Schedule The monthly buydown payments must run for a minimum of 1 year and cannot exceed a maximum of 3 years. Common frameworks for temporary buydowns are 3-2-1 (3 years) and 2-1 (2 years). Reductions in the buydown payments must be scheduled to occur annually, i.e., on the anniversary date of the first loan payment due date.	VA_Guidelines.txt
9c1af053-0ba5-435c-983d-ad59e70b815d	A reduction in the buydown payment means the Veteran’s monthly loan payment will increase. To avoid serious financial disruption, VA limits the increase in the Veteran’s payment to an amount that corresponds to a one-percent interest rate increase (effective interest rate). Annual increases can be rate-based or payment-based.	VA_Guidelines.txt
23eb997f-a1b7-40ab-ad20-361947f6e240	If rate-based, the Veteran’s payment increase can correspond to equal annual increases in the effective interest rate. If payment- based, the Veteran’s monthly loan payments must increase in equal or approximately equal dollar amounts, year over year. Please see the examples below.	VA_Guidelines.txt
d19d5658-c772-4848-8015-18dd7acaaa8b	Please see the examples below. Example of equal interest rate increase: A Veteran obtains a $300,000, 30-year home loan, at an interest rate of 5%, with a two-year, 2-1 temporary buydown. The total monthly amount due under the note is $1,610. In year one, the Veteran’s effective interest rate will be 3%, and in year two the Veteran’s effective interest rate will be 4%.	VA_Guidelines.txt
b6ecf95c-e869-416c-95ad-11782c286168	In year three, the buydown period is over and the Veteran will start making payments at the full interest rate of 5%. The Veteran’s effective interest rate increased by the same amount, i.e., 1 percentage point, for each annual adjustment.	VA_Guidelines.txt
6be0d30b-a455-4bf5-8e08-0b6e23d531c4	Table 10: Example of an Equal Interest Rate Increase Year Effective Veteran Monthly Buydown Total Payment Interest Rate Payment Contribution 1 3% $1,265 $345 $1,610 2 4% $1,432 $178 $1,610 3-30 5% $1,610 $0 $1,610 Continued on next page 7-33 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 7: Loans Involving Temporary Interest	VA_Guidelines.txt
6a7642c2-2846-48f3-a7e8-ec81d30cbfeb	Topic 7: Loans Involving Temporary Interest Buydowns, continued c	VA_Guidelines.txt
08b52987-32f6-49bf-b038-eaadf4714ebf	.	VA_Guidelines.txt
60b41bcb-cac3-45bb-b072-1af4361fa09a	Buydown Payment Schedule, continued Example of equal monthly payment increase: A Veteran obtains the same loan described in the example above. In year one, the Veteran’s monthly payment is $1,305 per month with $305 per month coming from the buydown escrow. In year two, the Veteran’s monthly payment is $1,457 per month with $153 per month coming from the buydown escrow.	VA_Guidelines.txt
8d605a9f-d200-442b-b0c8-121e771b7129	In year three, the buydown period is over and the Veteran’s monthly payment is $1,610. The Veteran’s monthly payment increased by approximately the same amount, i.e., $153 per month, for each annual adjustment.	VA_Guidelines.txt
e8dbd8f0-72b3-4177-aea4-b5fd7bdfc932	Table 11: Example of an Equal Monthly Payment Increase Year Effective Veteran Monthly Buydown Total Payment Interest Rate Payment Contribution 1 3.25% $1,305 $305 $1,610 2 4.14% $1,457 $153 $1,610 3-30 5% $1,610 $0 $1,610 d.	VA_Guidelines.txt
26806d1d-1c53-4a2e-b0d6-d1bd6a02dae8	Underwriting Considerations The lender must underwrite the loan and determine that the Veteran can afford the full payment amount under the note, without considering the monthly buydown contributions being applied from escrow. Nevertheless, the buydown arrangement can be considered a compensating factor for residual income and/or debt-to-income calculations.	VA_Guidelines.txt
16898366-5c9e-4e40-bb6b-9e7e5f09e8e7	If these calculations produce marginal results, the buydown plan (which could be used, for example, to offset a short-term debt), along with other compensating factors, may support approval of the loan. See “Compensating Factors” in Chapter 4 of this Handbook. A statement with the reasons for approval, signed by the underwriter, must be maintained in the lender’s loan file.	VA_Guidelines.txt
118a15cb-1d02-42f7-943e-b6ad0ea2e549	Lenders must submit the statement to VA if the loan is selected for review. e. Seller Concessions Temporary interest rate buydown funds provided by the builder or seller are considered seller concessions.	VA_Guidelines.txt
0847bb7a-067e-4401-a75a-91321c50e7b5	See Chapter 8, Topic 5 of this handbook for more information. 7-34 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 8: Farm Residence Loans Change Date: March 11, 2019 · This chapter has been revised in its entirety. a.	VA_Guidelines.txt
ff0dcd76-86df-4a33-87f7-6321a7271a49	Eligibility A loan for the purchase, construction, repair, alteration, or improvement of a farm residence which is occupied or will be occupied by the Veteran/borrower as a home is eligible for guaranty.	VA_Guidelines.txt
d1ce5f79-549b-4a55-9c96-70afa4152ad2	The loan cannot cover the: · nonresidential value of farm land in excess of the home site, · barn, silo, or other outbuildings necessary to the operation of the farm, or · Farm equipment or livestock.	VA_Guidelines.txt
3ba5534e-414b-47d3-b895-5d4c2a85e07a	A portion of the proceeds of a loan to construct a farm residence on encumbered land owned by the Veteran may be used to pay off the lien, or liens on the land only if the reasonable value of the land is at least equal to the amount of the lien(s). b.	VA_Guidelines.txt
d723d996-af51-459f-9843-ff276a974006	Underwriting If some or all of the income necessary to support the loan payments comes from farming operations, the Veteran’s ability and experience as a farm operator must be established. The procedures and analysis provided under “Self-Employment Income” in Chapter 4 apply generally.	VA_Guidelines.txt
471b0e76-7c75-4568-80a1-dbb899185285	In addition, apply the following: For new farmer or new farm operation, the lender must obtain the following: · Veteran’s proposed plan of operation of the farm, showing the number of acres for each crop, amount of livestock, etc., upon which an estimate of income and expenses may be made	VA_Guidelines.txt
02dda044-e8e3-4388-9a50-a57de32a2489	. · Veteran’s statement that he or she owns, or proposes purchasing the farm equipment required to operate the farm.	VA_Guidelines.txt
8777fcf5-0a6f-4260-80fe-a161be240ae4	If additional indebtedness is to be incurred in the purchase of this equipment, the statement should contain full details as to repayment terms, etc. An estimate of farm income and expenses by a local farm appraiser designated by VA or another qualified person, or the estimate used by a lender that has agreed to carry an operating line of credit for the Veteran.	VA_Guidelines.txt
bf22cdc3-7ca4-495f-b8cb-ac47dda841f9	The estimate should be based on the Veteran’s proposed plan of operation, his or her ability and experience, and the nature and condition of the farm to be sold, including livestock and livestock products.	VA_Guidelines.txt
7ecdd0d2-9d40-4da4-9d24-311d2391b4cc	The expense estimate must detail labor, seed, fertilizer, taxes and insurance, repairs, machinery, fuel, etc. · A copy of a commitment from a lender for an operating line of credit or evidence of the resources to be used to cover operating expenses. · Experienced farmer continuing the same farm operation.	VA_Guidelines.txt
bbd62e65-858a-4d45-a891-b23c40fa1762	If the Veteran finances operations out of an operating line of credit, obtain records of advances from, payments to, and carryover balances on the operating line of credit for the last 3 years (or additional periods if needed to demonstrate stability of Veteran’s operation).	VA_Guidelines.txt
a1f4ed6f-843c-4696-91a1-2aac1c8a06f5	Analyze the reasons for any build-up of operating debt. 7-35 7-35 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 9: Loans for Manufactured Homes Classified as Real Estate Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.	VA_Guidelines.txt
575c6dd2-db06-4507-8bd9-fa6fa5866ed1	How to Begin This section only addresses manufactured homes which are, or will be, permanently affixed to a lot and considered real estate under state law. Lenders considering making a loan involving a manufactured home that is not permanently affixed should contact 1-877-827-3702 and follow the instructions. b.	VA_Guidelines.txt
7b0891f7-97e5-4bde-965b-a67bd54cae2f	Allowable Loan Purposes and Calculation of the Maximum Loan Amount Table 12: Table of Loan Purposes and Maximum Loan Amount Calculations Allowable Loan Purpose Maximum Loan To purchase a The lesser of: manufactured home to be · the sum of the purchase price plus the cost of all other affixed to a lot already real property improvements, and the VA funding fee, or owned by the Veteran	VA_Guidelines.txt
f4853e36-fff7-4c1e-966a-dacf05bafa65	. · the VA NOV for the property, plus the VA funding fee.	VA_Guidelines.txt
20743822-93ab-43e1-9264-e8cf387a9c56	To purchase a The lesser of: manufactured home and a · the total purchase price of the manufactured home unit lot to which it will be and the lot, plus the cost of all other real property affixed	VA_Guidelines.txt
9a3f6567-4dff-407a-967d-0fdf2e59081f	. improvements, plus the VA funding fee, or · the purchase price of the manufactured home unit, plus the cost of all other real property improvements, plus the balance owed by the Veteran on a deferred purchase money mortgage or contract given for the purchase of the lot, plus the VA funding fee.	VA_Guidelines.txt
e0196163-5095-444f-8439-bbf2ce538ded	To obtain a regular “Cash- The lesser of: Out” refinance for an · the sum of the balance of the loan being refinanced, plus existing loan on a the purchase price of the lot, not to exceed its manufactured home and reasonable value, plus the costs of the necessary site purchase the lot to which preparation as determined by VA, plus a reasonable the home will be affixed	VA_Guidelines.txt
f19d6195-6155-4387-8825-eb52303c4781	. discount on that portion of the loan used to refinance the existing loan on the manufactured home, plus authorized closing costs plus the VA funding fee, or · the total reasonable value of the unit, lot, and real property improvements, plus VA. funding fee.	VA_Guidelines.txt
251897ac-21e7-4ca9-a6f7-d518f10e0092	Continued on next page 7-36 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 9: Loans for Manufactured Homes Classified as Real Estate, continued b.	VA_Guidelines.txt
d851e17f-72b1-4cda-82d9-7424b1ab77ac	Allowable Loan Purposes and Calculation of the Maximum Loan Amount, continued Table 12: Table of Loan Purposes and Maximum Loan Amount Calculations, continued Allowable Loan Purpose Maximum Loan An IRRRL to refinance an The sum of: existing VA loan on a · the balance of the VA loan being refinanced, plus permanently affixed · allowable closing costs, plus manufactured home and lot · up to two	VA_Guidelines.txt
49487260-b982-4682-a2f8-99d7e89db04f	costs, plus manufactured home and lot · up to two discount points, plus · the VA funding fee	VA_Guidelines.txt
e86fcb33-b187-4d11-8ad4-3f1da698485d	.	VA_Guidelines.txt
2cac873f-08fa-4b90-8c1e-3fef487cc0f6	Note: The provisions applicable to IRRRLs apply (See Chapter 6 of this handbook). 7-37 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 10: Loans to Native American Veterans on Trust Lands Change Date: March 11, 2019 · This chapter has been revised in its entirety. a.	VA_Guidelines.txt
cb1d14a5-b51f-4971-89c3-598bd0ef8fb3	General VA does underwrite direct loans to Native American Veterans on trust land. Native American Direct Loan information can be found at http://www.benefits.va.gov/HOMELOANS/nadl.asp.	VA_Guidelines.txt
17978e41-bce1-40be-9f2f-b82b0d301a09	Lenders should advise interested Native American Veterans to contact the VA RLC that has jurisdiction over the state that the property is located for information on the direct loan	VA_Guidelines.txt
1bc2d528-fc6d-46ad-b422-089895cdc0b6	. 7-38 CHAPTER 8: BORROWER FEES AND CHARGES AND THE VA FUNDING FEE Overview Topic Title Page 1 VA Policy on Fees and Charges Paid by the Veteran Borrower 8-2 2 Fees and Charges the Veteran-Borrower Can Pay 8-3 3 Fees and Charges the Veteran-Borrower Cannot Pay 8-8 4 Other Parties Fees and Charges for the Veteran-Borrower 8-10 5 Seller Concessions 8-11 6 What Happens to Fees and Charges If the Loan	VA_Guidelines.txt
2908ba8f-0c94-4a77-b057-28621449d6b6	6 What Happens to Fees and Charges If the Loan Never Closes 8-12 7 Fees and Charges That Can be Included In the Loan Amount 8-13 8 The VA Funding Fee 8-15 8-1 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 1: VA Policy on Fees and Charges Paid by the Veteran Borrower Change Date: November 8, 2012, Change 21 · This section has been updated to make minor	VA_Guidelines.txt
8430eb72-fe7a-44ab-be72-09fd213ef2b4	21 · This section has been updated to make minor grammatical edits	VA_Guidelines.txt
c31f56f0-f12d-473d-907f-62600268fcc5	. a.	VA_Guidelines.txt
26da49f0-7a1f-4a88-ad7c-80c75358d3fc	Policy The VA Home Loan program involves a veteran’s benefit. VA policy has evolved around the objective of helping the veteran to use his or her home loan benefit. Therefore, VA regulations limit the fees that the veteran can pay to obtain a loan. Lenders must strictly adhere to the limitations on borrower-paid fees and charges when making VA loans. b.	VA_Guidelines.txt
ceb65e21-fc24-433b-ab49-09645dc143b2	The VA Funding Fee In order to defray the cost of administering the VA Home Loan program, each veteran must pay a funding fee to VA at loan closing.	VA_Guidelines.txt
703ec322-e46b-4d09-839f-642bca0637a0	Congress may periodically change the funding fee rates to reflect changes in the cost of administering the program, or to assist a certain class of veterans	VA_Guidelines.txt
66139924-edf2-43f2-a424-527adcbd12b3	. 8-2 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 2: Fees and Charges the Veteran Borrower Can Pay Change Date: November 8, 2012, Change 21 · This section has been updated to make minor grammatical edits. a.	VA_Guidelines.txt
b6e40059-f6e8-4f26-99e7-83fc37ec0ecd	VA Regulations VA regulations in 38 CFR 36.4312 provide the list of fees and charges that the veteran can pay. b. Overview The veteran can pay a maximum of: · reasonable and customary amounts for any or all of the “Itemized Fees and Charges” designated by VA, plus · a one percent flat charge by the lender, plus · reasonable discount points.	VA_Guidelines.txt
5366da67-bab0-4bd7-8e41-18ace304ac8a	Note: Some special provisions apply to construction, alteration, improvement, and repair loans. Reference: See subsection e, “Construction Loans,” in Topic 2 of this chapter. c.	VA_Guidelines.txt
681eb9ab-1944-41e2-9a43-bf10d740eebf	Itemized Fees and Charges The veteran may pay any or all of the following itemized fees and charges in amounts that are reasonable and customary: Table 1: Itemized Fees and Charges Charge Description Appraisal and · The veteran can pay the fee of a VA appraiser and VA Compliance compliance inspectors.	VA_Guidelines.txt
ba32e549-b986-44b1-aeb7-dce430dab3a6	Inspections · The veteran can also pay for a second appraisal if he or she is requesting reconsideration of value. · The veteran cannot pay for an appraisal requested by the lender or seller for reconsideration of value. · The veteran cannot pay for appraisals requested by parties other than the veteran or lender.	VA_Guidelines.txt
63473f9a-50bd-4de3-bdbb-62e9f31c9881	Recording Fees The veteran can pay for recording fees and recording taxes or other charges incident to recordation. Credit Report The veteran can pay for the credit report obtained by the lender. For Automated Underwriting cases, the veteran may pay the evaluation fee of $50 in lieu of the charge for a credit report.	VA_Guidelines.txt
321d0eaf-bbe5-45e3-b728-c45461ce2db4	For “Refer” cases, the veteran may also pay the charge for a merged credit report, if required. Continued on next page 8-3 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 2: Fees and Charges the Veteran Borrower Can Pay, continued c.	VA_Guidelines.txt
3292adb8-5df3-485a-920b-5fcbdf525ae9	Itemized Fees and Charges, continued Table 1: Itemized Fees and Charges, continued Charge Description Prepaid Items The veteran can pay that portion of taxes, assessments, and similar items for the current year chargeable to the borrower and the initial deposit for the tax and insurance account. Hazard The veteran can pay the required hazard insurance premium.	VA_Guidelines.txt
95474ab4-d3bb-46d5-ac23-07f6c6755710	This Insurance includes flood insurance, if required. Flood Zone The veteran can pay the actual amount charged for a determination of Determination whether a property is in a special flood hazard area, if made by a third party who guarantees the accuracy of the determination. The veteran can pay a charge for a life-of-the-loan flood determination service purchased at the time of loan origination.	VA_Guidelines.txt
fb30ed27-b356-4447-a671-8297c0dd5c9b	A fee may not be charged for a flood zone determination made by the lender or a VA appraiser. Survey The veteran can pay a charge for a survey, if required by the lender or veteran. Any charge for a survey in connection with a condominium loan must have the prior approval of VA. Title The veteran may pay a fee for title examination and title insurance, if Examination and any.	VA_Guidelines.txt
25e344d4-803c-4ba5-a729-e4966aa677af	Title Insurance If the lender decides that an environmental protection lien endorsement to a title policy is needed, the cost of the endorsement may be charged to the veteran.	VA_Guidelines.txt
77bc19dd-1fc8-4207-81fa-e4dedf9458b4	Special Mailing For refinancing loans only, the veteran can pay charges for Federal Fees for Express, Express Mail, or a similar service when the saved per diem Refinancing interest cost to the veteran will exceed the cost of the special handling. Loans VA Funding Fee Unless exempt, each veteran must pay a funding fee to VA. Mortgage The veteran may pay a fee for MERS.	VA_Guidelines.txt
fe358d20-d534-4268-894c-d4ca7cee9d6e	Mortgage The veteran may pay a fee for MERS. MERS is a one-time fee for the Electronic purpose of electronically tracking the ownership of the beneficial Registration interest in a loan and its servicing rights. System (MERS) Fee Other Fees Additional fees attributable to local variances may be charged to the Authorized by veteran only if specifically authorized by VA.	VA_Guidelines.txt
fe72b00e-cf70-44a7-b025-d34c8c2ba8da	The lender may submit a VA written request to the Regional Loan Center for approval if the fee is normally paid by the borrower in a particular jurisdiction and considered reasonable and customary in the jurisdiction. Continued on next page 8-4 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 2: Fees and Charges the Veteran Borrower Can Pay, continued c.	VA_Guidelines.txt
8ba81da4-306e-43bc-8920-0be29296261d	Itemized Fees and Charges, continued Whenever the charge relates to services performed by a third party, the amount paid by the borrower must be limited to the actual charge of that third party. Example: If the lender obtains a credit report at a cost of $30, the lender may only charge the borrower $30 for the credit report.	VA_Guidelines.txt
3189a0e0-2c3c-429c-8aee-91f3df2a17e9	The lender may not charge $35, even if it believes that a $5 handling charge is fair. In addition, the borrower may not pay a duplicate fee for services that have already been paid for by another party. Examples: · An appraisal is completed on a property and paid for by a prospective purchaser, but the sale is never completed.	VA_Guidelines.txt
692f1eaa-031a-47e5-829d-2fef3bf4c36e	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.	VA_Guidelines.txt
499264cd-a71a-4ad0-88d6-8065c745f71a	Continued on next page 8-5 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 2: Fees and Charges the Veteran Borrower Can Pay, continued d. Lenders One Percent Flat Charge In addition to the “itemized fees and charges,” the lender may charge the veteran a flat charge not to exceed one percent of the loan amount.	VA_Guidelines.txt
2387e570-fa0d-44dd-994d-9a4e99683e14	Calculate the one percent on the principal amount after adding the funding fee to the loan, if the funding fee is paid from loan proceeds (except Interest Rate Reduction Refinancing Loans (IRRRLs). Note: For IRRRLs, use VA Form 26-8923, IRRRL Worksheet, for the calculation.	VA_Guidelines.txt
2c2edb80-d234-4831-a0d3-7b2022c3fb3c	The lender’s flat charge is intended to cover all of the lender’s costs and services which are not reimbursable as “itemized fees and charges.” The following list provides examples of items that cannot be charged to the veteran as “itemized fees and charges	VA_Guidelines.txt
f7f95894-1f2f-4465-ae28-6b0060cf75a3	.” Instead, the lender must cover any cost of these items out of its flat fee: · lender’s appraisals · lender’s inspections, except in construction loan cases · loan closing or settlement fees · document preparation fees · preparing loan papers or conveyancing fees · attorney’s services other than for title work · photographs · interest rate lock-in fees · postage and other mailing charges,	VA_Guidelines.txt
865add06-e2b1-4499-a72f-1127741ed457	lock-in fees · postage and other mailing charges, stationery, telephone calls, and other overhead · amortization schedules, pass books, and membership or entrance fees · escrow fees or charges · notary fees · commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser · trustee’s fees or charges · loan	VA_Guidelines.txt
ccb8a7bb-1b3f-4352-9293-32772a9204ce	such purchaser · trustee’s fees or charges · loan application or processing fees · fees for preparation of truth-in-lending disclosure statement · fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not, and · tax service fees	VA_Guidelines.txt
9e14ec9f-0541-411b-8b0d-1f006f085179	.	VA_Guidelines.txt
ebef1f69-691f-4435-b7ba-ed1d6832f43c	Continued on next page 8-6 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 2: Fees and Charges the Veteran Borrower Can Pay, continued e. Construction Loans The lender can charge an additional flat charge on construction, alteration, improvement, or repair loans.	VA_Guidelines.txt
41809070-df02-4781-9908-8c13618e34ea	If the lender supervises the progress of construction and/or makes advances to a veteran in excess of 50 percent of the loan during construction, alteration, improvement, or repair, then the lender may charge the veteran up to two percent of the loan amount in addition to the lender’s one percent flat charge.	VA_Guidelines.txt
c3d6314b-0551-494d-90b8-2182172a5cb6	Example: Total charges to the veteran in these cases would be, at a maximum, itemized fees and charges plus a three percent flat charge plus discount points.	VA_Guidelines.txt
4dadfdaa-2afe-48dc-8c06-6bafb26270dc	If the lender does not supervise the progress of construction or make advances to a veteran in excess of 50 percent of the loan during construction, alteration, improvement, or repair, then the lender may charge the veteran up to one percent of the loan amount in addition to the lender’s one percent flat charge.	VA_Guidelines.txt
cff96d41-83a5-4e14-921b-28f6bf94d804	Example: Total charges to the veteran in these cases would be, at a maximum, itemized fees and charges plus a two percent flat charge plus discount points.	VA_Guidelines.txt
ae04ad9f-2100-497c-bc82-1efcae5fca91	This provision also applies to supplemental loans. 8-7 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 3: Fees and Charges the Veteran Borrower Cannot Pay Change Date: November 8, 2010, Change 15 · This section has been updated to make minor grammatical edits. a.	VA_Guidelines.txt
6d602f9e-5cbd-499f-832e-deec82b3f9a0	Lender’s Use of One Percent Flat Charge The lender’s maximum allowable flat charge of one percent of the loan amount (or greater percentage in the case of construction loans) is intended to cover all of the lender’s costs and services which are not reimbursable as “itemized fees and charges	VA_Guidelines.txt
2a035b56-6863-47d1-97b9-0d10570b6117	.” The lender may pay third parties for services or do as it wishes with the funds from the flat charge, as long as the lender complies with the Real Estate Settlement Procedures Act (RESPA).	VA_Guidelines.txt
283f0a64-45e1-4ad5-b905-88816d53c021	Topic 2, subsections c and d, of this chapter provide some examples of items that cannot be charged to the veteran as “itemized fees and charges.” This section provides more examples of items that cannot be paid by the veteran, but can be paid out of the lender’s flat charge or by some party other than the veteran. b. Attorney’s Fees The lender may not charge the borrower for attorney’s fees.	VA_Guidelines.txt
d6f3b16f-cd22-4b87-9d13-1ebd209ac8eb	However, reasonable fees for title examination work and title insurance can be paid by the borrower. They are allowable itemized fees and charges. VA does not intend to prevent the veteran from seeking independent legal representation. Therefore, the veteran can independently retain an attorney and pay a fee for legal services in connection with the purchase of a home.	VA_Guidelines.txt
57bc7ce5-c3ba-416c-b78a-7ece751b09f7	Closing documents should clearly indicate that the attorney’s fee is not being charged by the lender, but is being paid by the veteran as part of an independent arrangement with an attorney. c. Brokerage Fees Fees or commissions charged by a real estate agent or broker in connection with a VA loan may not be charged to or paid by the veteran-purchaser.	VA_Guidelines.txt
ce4bad66-55e8-4565-ae2c-c7ed1e569c58	While use of “buyer” brokers is not precluded, veteran-purchasers may not, under any circumstances, be charged a brokerage fee or commission in connection with the services of such individuals.	VA_Guidelines.txt
077fe43a-219b-4a55-9d69-802196ace2ee	Since information on property available for purchase and financing options is widely available to the public from a variety of sources, VA does not believe that preventing the veteran from paying buyer-broker fees will harm the veteran.	VA_Guidelines.txt
1b7343f4-184c-446a-88ce-128b5a71bb38	Continued on next page 8-8 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 3: Fees and Charges the Veteran Borrower Cannot Pay, continued d. Prepayment Penalties A veteran obtaining a VA refinancing loan cannot use loan proceeds to pay penalty costs for prepayment of an existing lien.	VA_Guidelines.txt
b267a263-70ef-4df1-944e-397766c2e258	A veteran purchasing a property with a VA loan cannot pay penalty costs required to discharge any existing liens on the seller’s property. e.	VA_Guidelines.txt
b5aab977-e32b-43d4-a08b-8c59b7fd806f	HUD/FHA Inspection Fees for Builders In proposed construction cases in which the dwelling was constructed under the Department of Housing and Urban Development (HUD) supervision, the cost of any inspections or re- inspections must be borne by the builder or sponsor and are not chargeable to the veteran- purchaser.	VA_Guidelines.txt
e46dee7b-0967-47ce-95bb-9905027393a1	This includes: · re-inspections by VA or HUD of onsite or offsite work for which an escrow agreement was established, and · any additional re-inspections deemed necessary by VA to assure conformity with VA regulations	VA_Guidelines.txt

b7a028d8-0c18-497c-ada8-0d048493934d

Hybrid ARMs: If the initial contract interest rate remains fixed for less than 5 years, the initial adjustment is limited to a maximum increase, or decrease of one percentage point and the interest rate increase over the life of the loan is limited to five percentage points.

VA_Guidelines.txt

53bfb148-b7c6-4c73-9c5b-11504f097abc

If the initial contract interest rate remains fixed for 5 years or more, the initial adjustment will be limited to a maximum increase or decrease of two percentage points and the interest rate increase over the life of the loan will be limited to six percentage points. c.

VA_Guidelines.txt

fba51d14-b253-479c-a09a-6aafbbfae23b

Underwriting an ARM ARM loans that may adjust after 1 year must be underwritten at one percentage point above the initial rate.

VA_Guidelines.txt

702a0fd3-a7b3-4846-97fe-03629723d162

Hybrid ARMs with a fixed period of 3 or more years may be underwritten at the initial interest rate 7-31 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 7: Loans Involving Temporary Interest Buydowns Change Date: July 27, 2023 · Subsection b

VA_Guidelines.txt

18559ea3-2040-4956-b81c-a67ab37404a5

. has been updated to clarify when a temporary buydown may be used in conjunction with a VA-guaranteed loan and how escrowed funds are to be held. · Subsection c. has been updated to clarify buydown payment schedules. · Subsection d. has been updated to clarify how to underwrite loans involving a temporary buydown. · Subsection e

VA_Guidelines.txt

987e552e-740d-47f2-a68a-7af186a41b8e

. · Subsection e. has been added to include information on when a temporary buydown is considered a seller concession. a.

VA_Guidelines.txt

15afe4a7-eeab-4b8e-8227-6c57fb84738a

Description VA generally allows two types of temporary interest rate buydowns. One is a marketing tool, where builders, sellers, or lenders establish and fund escrows to temporarily reduce a borrower’s loan payments during the initial years of the loan. A second is where a borrower funds an escrow account for herself/himself as a financial management tool.

VA_Guidelines.txt

7af6d454-b207-4476-b7cf-fcb70ec0f261

Lenders may not fund or establish a temporary buydown by charging an above market interest rate. VA can guaranty loans involving temporary interest rate buydowns, provided that the loan meets all other applicable requirements.12 In VA’s home loan programs, temporary interest rate buydowns can only be used in conjunction with fixed rate loans. b.

VA_Guidelines.txt

b5b0f4a1-e559-4f7c-878c-adf5e307200f

Escrow Agreement Funds must be held in a segregated escrow account. The lender is responsible for ensuring that the escrowed funds are legally protected and used only for payments due under the note. The funds may not be used to pay past due monthly loan payments, or for any other purpose. If the loan is foreclosed or prepaid, the funds must be credited against the Veteran’s indebtedness.

VA_Guidelines.txt

53eb7e2a-c41b-4eda-9f19-560b4192c41f

The funds may not revert to the party that established the escrow. If the property is sold subject to, or on an assumption of the loan, the escrow must continue to pay out on behalf of the new borrower. It is the lender’s responsibility to review and determine the acceptability of the buydown and ensure that it complies with all applicable federal and state laws.

VA_Guidelines.txt

fa0dd055-4559-4284-b362-a9b60e9591c2

Lenders must provide the Veteran with a clear, written explanation of the buydown agreement. A copy of the buydown and escrow agreements, signed by the Veteran, must be maintained in the lender’s loan file.13 Lenders must submit such agreements to VA if the loan is selected for review. Continued on next page 12 See 38 U. S.

VA_Guidelines.txt

2282b051-95f2-4320-a419-42c3ad3fbe5d

Continued on next page 12 See 38 U. S. Code § 3703(c) (authorizing guaranteed loans with interest rates agreed upon by the Veteran and lender). 13 38 C. F. R. 36.4333. 7-32 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 7: Loans Involving Temporary Interest Buydowns, continued c.

VA_Guidelines.txt

2b5a20c3-e9a8-4f04-929f-63f6d3c6cc48

Buydown Payment Schedule The monthly buydown payments must run for a minimum of 1 year and cannot exceed a maximum of 3 years. Common frameworks for temporary buydowns are 3-2-1 (3 years) and 2-1 (2 years). Reductions in the buydown payments must be scheduled to occur annually, i.e., on the anniversary date of the first loan payment due date.

VA_Guidelines.txt

9c1af053-0ba5-435c-983d-ad59e70b815d

A reduction in the buydown payment means the Veteran’s monthly loan payment will increase. To avoid serious financial disruption, VA limits the increase in the Veteran’s payment to an amount that corresponds to a one-percent interest rate increase (effective interest rate). Annual increases can be rate-based or payment-based.

VA_Guidelines.txt

23eb997f-a1b7-40ab-ad20-361947f6e240

If rate-based, the Veteran’s payment increase can correspond to equal annual increases in the effective interest rate. If payment- based, the Veteran’s monthly loan payments must increase in equal or approximately equal dollar amounts, year over year. Please see the examples below.

VA_Guidelines.txt

d19d5658-c772-4848-8015-18dd7acaaa8b

Please see the examples below. Example of equal interest rate increase: A Veteran obtains a $300,000, 30-year home loan, at an interest rate of 5%, with a two-year, 2-1 temporary buydown. The total monthly amount due under the note is $1,610. In year one, the Veteran’s effective interest rate will be 3%, and in year two the Veteran’s effective interest rate will be 4%.

VA_Guidelines.txt

b6ecf95c-e869-416c-95ad-11782c286168

In year three, the buydown period is over and the Veteran will start making payments at the full interest rate of 5%. The Veteran’s effective interest rate increased by the same amount, i.e., 1 percentage point, for each annual adjustment.

VA_Guidelines.txt

6be0d30b-a455-4bf5-8e08-0b6e23d531c4

Table 10: Example of an Equal Interest Rate Increase Year Effective Veteran Monthly Buydown Total Payment Interest Rate Payment Contribution 1 3% $1,265 $345 $1,610 2 4% $1,432 $178 $1,610 3-30 5% $1,610 $0 $1,610 Continued on next page 7-33 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 7: Loans Involving Temporary Interest

VA_Guidelines.txt

6a7642c2-2846-48f3-a7e8-ec81d30cbfeb

Topic 7: Loans Involving Temporary Interest Buydowns, continued c

VA_Guidelines.txt

08b52987-32f6-49bf-b038-eaadf4714ebf

.

VA_Guidelines.txt

60b41bcb-cac3-45bb-b072-1af4361fa09a

Buydown Payment Schedule, continued Example of equal monthly payment increase: A Veteran obtains the same loan described in the example above. In year one, the Veteran’s monthly payment is $1,305 per month with $305 per month coming from the buydown escrow. In year two, the Veteran’s monthly payment is $1,457 per month with $153 per month coming from the buydown escrow.

VA_Guidelines.txt

8d605a9f-d200-442b-b0c8-121e771b7129

In year three, the buydown period is over and the Veteran’s monthly payment is $1,610. The Veteran’s monthly payment increased by approximately the same amount, i.e., $153 per month, for each annual adjustment.

VA_Guidelines.txt

e8dbd8f0-72b3-4177-aea4-b5fd7bdfc932

Table 11: Example of an Equal Monthly Payment Increase Year Effective Veteran Monthly Buydown Total Payment Interest Rate Payment Contribution 1 3.25% $1,305 $305 $1,610 2 4.14% $1,457 $153 $1,610 3-30 5% $1,610 $0 $1,610 d.

VA_Guidelines.txt

26806d1d-1c53-4a2e-b0d6-d1bd6a02dae8

Underwriting Considerations The lender must underwrite the loan and determine that the Veteran can afford the full payment amount under the note, without considering the monthly buydown contributions being applied from escrow. Nevertheless, the buydown arrangement can be considered a compensating factor for residual income and/or debt-to-income calculations.

VA_Guidelines.txt

16898366-5c9e-4e40-bb6b-9e7e5f09e8e7

If these calculations produce marginal results, the buydown plan (which could be used, for example, to offset a short-term debt), along with other compensating factors, may support approval of the loan. See “Compensating Factors” in Chapter 4 of this Handbook. A statement with the reasons for approval, signed by the underwriter, must be maintained in the lender’s loan file.

VA_Guidelines.txt

118a15cb-1d02-42f7-943e-b6ad0ea2e549

Lenders must submit the statement to VA if the loan is selected for review. e. Seller Concessions Temporary interest rate buydown funds provided by the builder or seller are considered seller concessions.

VA_Guidelines.txt

0847bb7a-067e-4401-a75a-91321c50e7b5

See Chapter 8, Topic 5 of this handbook for more information. 7-34 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 8: Farm Residence Loans Change Date: March 11, 2019 · This chapter has been revised in its entirety. a.

VA_Guidelines.txt

ff0dcd76-86df-4a33-87f7-6321a7271a49

Eligibility A loan for the purchase, construction, repair, alteration, or improvement of a farm residence which is occupied or will be occupied by the Veteran/borrower as a home is eligible for guaranty.

VA_Guidelines.txt

d1ce5f79-549b-4a55-9c96-70afa4152ad2

The loan cannot cover the: · nonresidential value of farm land in excess of the home site, · barn, silo, or other outbuildings necessary to the operation of the farm, or · Farm equipment or livestock.

VA_Guidelines.txt

3ba5534e-414b-47d3-b895-5d4c2a85e07a

A portion of the proceeds of a loan to construct a farm residence on encumbered land owned by the Veteran may be used to pay off the lien, or liens on the land only if the reasonable value of the land is at least equal to the amount of the lien(s). b.

VA_Guidelines.txt

d723d996-af51-459f-9843-ff276a974006

Underwriting If some or all of the income necessary to support the loan payments comes from farming operations, the Veteran’s ability and experience as a farm operator must be established. The procedures and analysis provided under “Self-Employment Income” in Chapter 4 apply generally.

VA_Guidelines.txt

471b0e76-7c75-4568-80a1-dbb899185285

In addition, apply the following: For new farmer or new farm operation, the lender must obtain the following: · Veteran’s proposed plan of operation of the farm, showing the number of acres for each crop, amount of livestock, etc., upon which an estimate of income and expenses may be made

VA_Guidelines.txt

02dda044-e8e3-4388-9a50-a57de32a2489

. · Veteran’s statement that he or she owns, or proposes purchasing the farm equipment required to operate the farm.

VA_Guidelines.txt

8777fcf5-0a6f-4260-80fe-a161be240ae4

If additional indebtedness is to be incurred in the purchase of this equipment, the statement should contain full details as to repayment terms, etc. An estimate of farm income and expenses by a local farm appraiser designated by VA or another qualified person, or the estimate used by a lender that has agreed to carry an operating line of credit for the Veteran.

VA_Guidelines.txt

bf22cdc3-7ca4-495f-b8cb-ac47dda841f9

The estimate should be based on the Veteran’s proposed plan of operation, his or her ability and experience, and the nature and condition of the farm to be sold, including livestock and livestock products.

VA_Guidelines.txt

7ecdd0d2-9d40-4da4-9d24-311d2391b4cc

The expense estimate must detail labor, seed, fertilizer, taxes and insurance, repairs, machinery, fuel, etc. · A copy of a commitment from a lender for an operating line of credit or evidence of the resources to be used to cover operating expenses. · Experienced farmer continuing the same farm operation.

VA_Guidelines.txt

bbd62e65-858a-4d45-a891-b23c40fa1762

If the Veteran finances operations out of an operating line of credit, obtain records of advances from, payments to, and carryover balances on the operating line of credit for the last 3 years (or additional periods if needed to demonstrate stability of Veteran’s operation).

VA_Guidelines.txt

a1f4ed6f-843c-4696-91a1-2aac1c8a06f5

Analyze the reasons for any build-up of operating debt. 7-35 7-35 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 9: Loans for Manufactured Homes Classified as Real Estate Change Date: February 22, 2019 · This chapter has been revised in its entirety. a.

VA_Guidelines.txt

575c6dd2-db06-4507-8bd9-fa6fa5866ed1

How to Begin This section only addresses manufactured homes which are, or will be, permanently affixed to a lot and considered real estate under state law. Lenders considering making a loan involving a manufactured home that is not permanently affixed should contact 1-877-827-3702 and follow the instructions. b.

VA_Guidelines.txt

7b0891f7-97e5-4bde-965b-a67bd54cae2f

Allowable Loan Purposes and Calculation of the Maximum Loan Amount Table 12: Table of Loan Purposes and Maximum Loan Amount Calculations Allowable Loan Purpose Maximum Loan To purchase a The lesser of: manufactured home to be · the sum of the purchase price plus the cost of all other affixed to a lot already real property improvements, and the VA funding fee, or owned by the Veteran

VA_Guidelines.txt

f4853e36-fff7-4c1e-966a-dacf05bafa65

. · the VA NOV for the property, plus the VA funding fee.

VA_Guidelines.txt

20743822-93ab-43e1-9264-e8cf387a9c56

To purchase a The lesser of: manufactured home and a · the total purchase price of the manufactured home unit lot to which it will be and the lot, plus the cost of all other real property affixed

VA_Guidelines.txt

9a3f6567-4dff-407a-967d-0fdf2e59081f

. improvements, plus the VA funding fee, or · the purchase price of the manufactured home unit, plus the cost of all other real property improvements, plus the balance owed by the Veteran on a deferred purchase money mortgage or contract given for the purchase of the lot, plus the VA funding fee.

VA_Guidelines.txt

e0196163-5095-444f-8439-bbf2ce538ded

To obtain a regular “Cash- The lesser of: Out” refinance for an · the sum of the balance of the loan being refinanced, plus existing loan on a the purchase price of the lot, not to exceed its manufactured home and reasonable value, plus the costs of the necessary site purchase the lot to which preparation as determined by VA, plus a reasonable the home will be affixed

VA_Guidelines.txt

f19d6195-6155-4387-8825-eb52303c4781

. discount on that portion of the loan used to refinance the existing loan on the manufactured home, plus authorized closing costs plus the VA funding fee, or · the total reasonable value of the unit, lot, and real property improvements, plus VA. funding fee.

VA_Guidelines.txt

251897ac-21e7-4ca9-a6f7-d518f10e0092

Continued on next page 7-36 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 9: Loans for Manufactured Homes Classified as Real Estate, continued b.

VA_Guidelines.txt

d851e17f-72b1-4cda-82d9-7424b1ab77ac

Allowable Loan Purposes and Calculation of the Maximum Loan Amount, continued Table 12: Table of Loan Purposes and Maximum Loan Amount Calculations, continued Allowable Loan Purpose Maximum Loan An IRRRL to refinance an The sum of: existing VA loan on a · the balance of the VA loan being refinanced, plus permanently affixed · allowable closing costs, plus manufactured home and lot · up to two

VA_Guidelines.txt

49487260-b982-4682-a2f8-99d7e89db04f

costs, plus manufactured home and lot · up to two discount points, plus · the VA funding fee

VA_Guidelines.txt

e86fcb33-b187-4d11-8ad4-3f1da698485d

.

VA_Guidelines.txt

2cac873f-08fa-4b90-8c1e-3fef487cc0f6

Note: The provisions applicable to IRRRLs apply (See Chapter 6 of this handbook). 7-37 VA Lenders Handbook 26-7 Chapter 7: Loans Requiring Special Underwriting, Guaranty, and Other Considerations Topic 10: Loans to Native American Veterans on Trust Lands Change Date: March 11, 2019 · This chapter has been revised in its entirety. a.

VA_Guidelines.txt

cb1d14a5-b51f-4971-89c3-598bd0ef8fb3

General VA does underwrite direct loans to Native American Veterans on trust land. Native American Direct Loan information can be found at http://www.benefits.va.gov/HOMELOANS/nadl.asp.

VA_Guidelines.txt

17978e41-bce1-40be-9f2f-b82b0d301a09

Lenders should advise interested Native American Veterans to contact the VA RLC that has jurisdiction over the state that the property is located for information on the direct loan

VA_Guidelines.txt

1bc2d528-fc6d-46ad-b422-089895cdc0b6

. 7-38 CHAPTER 8: BORROWER FEES AND CHARGES AND THE VA FUNDING FEE Overview Topic Title Page 1 VA Policy on Fees and Charges Paid by the Veteran Borrower 8-2 2 Fees and Charges the Veteran-Borrower Can Pay 8-3 3 Fees and Charges the Veteran-Borrower Cannot Pay 8-8 4 Other Parties Fees and Charges for the Veteran-Borrower 8-10 5 Seller Concessions 8-11 6 What Happens to Fees and Charges If the Loan

VA_Guidelines.txt

2908ba8f-0c94-4a77-b057-28621449d6b6

6 What Happens to Fees and Charges If the Loan Never Closes 8-12 7 Fees and Charges That Can be Included In the Loan Amount 8-13 8 The VA Funding Fee 8-15 8-1 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 1: VA Policy on Fees and Charges Paid by the Veteran Borrower Change Date: November 8, 2012, Change 21 · This section has been updated to make minor

VA_Guidelines.txt

8430eb72-fe7a-44ab-be72-09fd213ef2b4

21 · This section has been updated to make minor grammatical edits

VA_Guidelines.txt

c31f56f0-f12d-473d-907f-62600268fcc5

. a.

VA_Guidelines.txt

26da49f0-7a1f-4a88-ad7c-80c75358d3fc

Policy The VA Home Loan program involves a veteran’s benefit. VA policy has evolved around the objective of helping the veteran to use his or her home loan benefit. Therefore, VA regulations limit the fees that the veteran can pay to obtain a loan. Lenders must strictly adhere to the limitations on borrower-paid fees and charges when making VA loans. b.

VA_Guidelines.txt

ceb65e21-fc24-433b-ab49-09645dc143b2

The VA Funding Fee In order to defray the cost of administering the VA Home Loan program, each veteran must pay a funding fee to VA at loan closing.

VA_Guidelines.txt

703ec322-e46b-4d09-839f-642bca0637a0

Congress may periodically change the funding fee rates to reflect changes in the cost of administering the program, or to assist a certain class of veterans

VA_Guidelines.txt

66139924-edf2-43f2-a424-527adcbd12b3

. 8-2 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 2: Fees and Charges the Veteran Borrower Can Pay Change Date: November 8, 2012, Change 21 · This section has been updated to make minor grammatical edits. a.

VA_Guidelines.txt

b6e40059-f6e8-4f26-99e7-83fc37ec0ecd

VA Regulations VA regulations in 38 CFR 36.4312 provide the list of fees and charges that the veteran can pay. b. Overview The veteran can pay a maximum of: · reasonable and customary amounts for any or all of the “Itemized Fees and Charges” designated by VA, plus · a one percent flat charge by the lender, plus · reasonable discount points.

VA_Guidelines.txt

5366da67-bab0-4bd7-8e41-18ace304ac8a

Note: Some special provisions apply to construction, alteration, improvement, and repair loans. Reference: See subsection e, “Construction Loans,” in Topic 2 of this chapter. c.

VA_Guidelines.txt

681eb9ab-1944-41e2-9a43-bf10d740eebf

Itemized Fees and Charges The veteran may pay any or all of the following itemized fees and charges in amounts that are reasonable and customary: Table 1: Itemized Fees and Charges Charge Description Appraisal and · The veteran can pay the fee of a VA appraiser and VA Compliance compliance inspectors.

VA_Guidelines.txt

ba32e549-b986-44b1-aeb7-dce430dab3a6

Inspections · The veteran can also pay for a second appraisal if he or she is requesting reconsideration of value. · The veteran cannot pay for an appraisal requested by the lender or seller for reconsideration of value. · The veteran cannot pay for appraisals requested by parties other than the veteran or lender.

VA_Guidelines.txt

63473f9a-50bd-4de3-bdbb-62e9f31c9881

Recording Fees The veteran can pay for recording fees and recording taxes or other charges incident to recordation. Credit Report The veteran can pay for the credit report obtained by the lender. For Automated Underwriting cases, the veteran may pay the evaluation fee of $50 in lieu of the charge for a credit report.

VA_Guidelines.txt

321d0eaf-bbe5-45e3-b728-c45461ce2db4

For “Refer” cases, the veteran may also pay the charge for a merged credit report, if required. Continued on next page 8-3 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 2: Fees and Charges the Veteran Borrower Can Pay, continued c.

VA_Guidelines.txt

3292adb8-5df3-485a-920b-5fcbdf525ae9

Itemized Fees and Charges, continued Table 1: Itemized Fees and Charges, continued Charge Description Prepaid Items The veteran can pay that portion of taxes, assessments, and similar items for the current year chargeable to the borrower and the initial deposit for the tax and insurance account. Hazard The veteran can pay the required hazard insurance premium.

VA_Guidelines.txt

95474ab4-d3bb-46d5-ac23-07f6c6755710

This Insurance includes flood insurance, if required. Flood Zone The veteran can pay the actual amount charged for a determination of Determination whether a property is in a special flood hazard area, if made by a third party who guarantees the accuracy of the determination. The veteran can pay a charge for a life-of-the-loan flood determination service purchased at the time of loan origination.

VA_Guidelines.txt

fb30ed27-b356-4447-a671-8297c0dd5c9b

A fee may not be charged for a flood zone determination made by the lender or a VA appraiser. Survey The veteran can pay a charge for a survey, if required by the lender or veteran. Any charge for a survey in connection with a condominium loan must have the prior approval of VA. Title The veteran may pay a fee for title examination and title insurance, if Examination and any.

VA_Guidelines.txt

25e344d4-803c-4ba5-a729-e4966aa677af

Title Insurance If the lender decides that an environmental protection lien endorsement to a title policy is needed, the cost of the endorsement may be charged to the veteran.

VA_Guidelines.txt

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Special Mailing For refinancing loans only, the veteran can pay charges for Federal Fees for Express, Express Mail, or a similar service when the saved per diem Refinancing interest cost to the veteran will exceed the cost of the special handling. Loans VA Funding Fee Unless exempt, each veteran must pay a funding fee to VA. Mortgage The veteran may pay a fee for MERS.

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Mortgage The veteran may pay a fee for MERS. MERS is a one-time fee for the Electronic purpose of electronically tracking the ownership of the beneficial Registration interest in a loan and its servicing rights. System (MERS) Fee Other Fees Additional fees attributable to local variances may be charged to the Authorized by veteran only if specifically authorized by VA.

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The lender may submit a VA written request to the Regional Loan Center for approval if the fee is normally paid by the borrower in a particular jurisdiction and considered reasonable and customary in the jurisdiction. Continued on next page 8-4 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 2: Fees and Charges the Veteran Borrower Can Pay, continued c.

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Itemized Fees and Charges, continued Whenever the charge relates to services performed by a third party, the amount paid by the borrower must be limited to the actual charge of that third party. Example: If the lender obtains a credit report at a cost of $30, the lender may only charge the borrower $30 for the credit report.

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The lender may not charge $35, even if it believes that a $5 handling charge is fair. In addition, the borrower may not pay a duplicate fee for services that have already been paid for by another party. Examples: · An appraisal is completed on a property and paid for by a prospective purchaser, but the sale is never completed.

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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.

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Continued on next page 8-5 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 2: Fees and Charges the Veteran Borrower Can Pay, continued d. Lenders One Percent Flat Charge In addition to the “itemized fees and charges,” the lender may charge the veteran a flat charge not to exceed one percent of the loan amount.

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Calculate the one percent on the principal amount after adding the funding fee to the loan, if the funding fee is paid from loan proceeds (except Interest Rate Reduction Refinancing Loans (IRRRLs). Note: For IRRRLs, use VA Form 26-8923, IRRRL Worksheet, for the calculation.

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The lender’s flat charge is intended to cover all of the lender’s costs and services which are not reimbursable as “itemized fees and charges.” The following list provides examples of items that cannot be charged to the veteran as “itemized fees and charges

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.” Instead, the lender must cover any cost of these items out of its flat fee: · lender’s appraisals · lender’s inspections, except in construction loan cases · loan closing or settlement fees · document preparation fees · preparing loan papers or conveyancing fees · attorney’s services other than for title work · photographs · interest rate lock-in fees · postage and other mailing charges,

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lock-in fees · postage and other mailing charges, stationery, telephone calls, and other overhead · amortization schedules, pass books, and membership or entrance fees · escrow fees or charges · notary fees · commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser · trustee’s fees or charges · loan

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such purchaser · trustee’s fees or charges · loan application or processing fees · fees for preparation of truth-in-lending disclosure statement · fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not, and · tax service fees

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Continued on next page 8-6 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 2: Fees and Charges the Veteran Borrower Can Pay, continued e. Construction Loans The lender can charge an additional flat charge on construction, alteration, improvement, or repair loans.

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If the lender supervises the progress of construction and/or makes advances to a veteran in excess of 50 percent of the loan during construction, alteration, improvement, or repair, then the lender may charge the veteran up to two percent of the loan amount in addition to the lender’s one percent flat charge.

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Example: Total charges to the veteran in these cases would be, at a maximum, itemized fees and charges plus a three percent flat charge plus discount points.

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If the lender does not supervise the progress of construction or make advances to a veteran in excess of 50 percent of the loan during construction, alteration, improvement, or repair, then the lender may charge the veteran up to one percent of the loan amount in addition to the lender’s one percent flat charge.

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Example: Total charges to the veteran in these cases would be, at a maximum, itemized fees and charges plus a two percent flat charge plus discount points.

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This provision also applies to supplemental loans. 8-7 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 3: Fees and Charges the Veteran Borrower Cannot Pay Change Date: November 8, 2010, Change 15 · This section has been updated to make minor grammatical edits. a.

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Lender’s Use of One Percent Flat Charge The lender’s maximum allowable flat charge of one percent of the loan amount (or greater percentage in the case of construction loans) is intended to cover all of the lender’s costs and services which are not reimbursable as “itemized fees and charges

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.” The lender may pay third parties for services or do as it wishes with the funds from the flat charge, as long as the lender complies with the Real Estate Settlement Procedures Act (RESPA).

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Topic 2, subsections c and d, of this chapter provide some examples of items that cannot be charged to the veteran as “itemized fees and charges.” This section provides more examples of items that cannot be paid by the veteran, but can be paid out of the lender’s flat charge or by some party other than the veteran. b. Attorney’s Fees The lender may not charge the borrower for attorney’s fees.

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However, reasonable fees for title examination work and title insurance can be paid by the borrower. They are allowable itemized fees and charges. VA does not intend to prevent the veteran from seeking independent legal representation. Therefore, the veteran can independently retain an attorney and pay a fee for legal services in connection with the purchase of a home.

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Closing documents should clearly indicate that the attorney’s fee is not being charged by the lender, but is being paid by the veteran as part of an independent arrangement with an attorney. c. Brokerage Fees Fees or commissions charged by a real estate agent or broker in connection with a VA loan may not be charged to or paid by the veteran-purchaser.

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While use of “buyer” brokers is not precluded, veteran-purchasers may not, under any circumstances, be charged a brokerage fee or commission in connection with the services of such individuals.

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Since information on property available for purchase and financing options is widely available to the public from a variety of sources, VA does not believe that preventing the veteran from paying buyer-broker fees will harm the veteran.

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Continued on next page 8-8 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 3: Fees and Charges the Veteran Borrower Cannot Pay, continued d. Prepayment Penalties A veteran obtaining a VA refinancing loan cannot use loan proceeds to pay penalty costs for prepayment of an existing lien.

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A veteran purchasing a property with a VA loan cannot pay penalty costs required to discharge any existing liens on the seller’s property. e.

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HUD/FHA Inspection Fees for Builders In proposed construction cases in which the dwelling was constructed under the Department of Housing and Urban Development (HUD) supervision, the cost of any inspections or re- inspections must be borne by the builder or sponsor and are not chargeable to the veteran- purchaser.

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This includes: · re-inspections by VA or HUD of onsite or offsite work for which an escrow agreement was established, and · any additional re-inspections deemed necessary by VA to assure conformity with VA regulations

VA_Guidelines.txt