Mitchell6024/quickb · Datasets at Hugging Face

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d8a92610-f48a-4e59-8bdd-f1377020f00a	. 8-9 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 4: Other Parties Fees and Charges for the Veteran Borrower Change Date: November 8, 2010, Change 15 · This section has been updated to make minor grammatical edits. a.	VA_Guidelines.txt
bb3ad2f0-1806-4e12-9496-91bc656310b3	Policy The seller, lender, or any other party may pay fees and charges, including discount points, on behalf of the borrower. VA regulations limit charges “made against or paid by” the borrower. They do not limit the payment of fees and charges by other parties. b. Exception Excessive seller concessions are prohibited.	VA_Guidelines.txt
de112745-96a9-47b1-917e-67d22d706d93	Reference: See Topic 5 of this chapter. 8-10 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 5: Seller Concessions Change Date: November 8, 2010, Change 15 · This section has been updated to make minor grammatical edits. a.	VA_Guidelines.txt
0c46a2b4-e006-4a09-854b-d649861af6de	Definition For the purposes of this topic, a seller concession is anything of value added to the transaction by the builder or seller for which the buyer pays nothing additional and which the seller is not customarily expected or required to pay or provide. b.	VA_Guidelines.txt
0a2960d8-4091-4f92-976c-6931d33e11ff	Seller Concessions Seller concessions include, but are not limited to, the following: · payment of the buyer’s VA funding fee · prepayment of the buyer’s property taxes and insurance · gifts such as a television set or microwave oven · payment of extra points to provide permanent interest rate buydowns · provision of escrowed funds to provide temporary interest rate buydowns, and · payoff of	VA_Guidelines.txt
04d6e9d4-53ae-4bca-8974-4bfb9aac186b	temporary interest rate buydowns, and · payoff of credit balances or judgments on behalf of the buyer	VA_Guidelines.txt
b31eb6d7-c977-4cb9-b9fe-66f01f540704	.	VA_Guidelines.txt
0f019714-3928-44ab-b9d3-e103902b845b	Seller concessions do not include payment of the buyer’s closing costs, or payment of points as appropriate to the market. Example: If the market dictates an interest rate of 7½ percent with two discount points, the seller’s payment of the two points would not be a seller concession. If the seller paid five points, three of these points would be considered a seller concession. c.	VA_Guidelines.txt
6b7c1214-acd6-435e-a1bf-16b92c819550	The Problem In some localities, builders or sellers offer concessions as a competitive tool. In extreme cases, the concessions may entice unwary and unqualified veterans into home mortgages they cannot afford. The concessions may disguise the veteran’s inability to qualify for the loan. d.	VA_Guidelines.txt
08de469d-2d9d-4bbf-8647-ffe564204d46	The Four Percent Limit Any seller concession or combination of concessions which exceeds four percent of the established reasonable value of the property is considered excessive, and unacceptable for VA-guaranteed loans.	VA_Guidelines.txt
1673bd4e-ea24-4cae-b70a-892b024af92a	Do not include normal discount points and payment of the buyer’s closing costs in total concessions for determining whether concessions exceed the four percent limit. 8-11 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 6: What Happens to Fees and Charges If the Loan Never Closes?	VA_Guidelines.txt
e5c0735f-7693-46c0-b444-599c217b5ea6	Change Date: November 8, 2010, Change 15 · This section has been updated to make minor grammatical edits. a. Itemized Fees and Charges The borrower’s out-of-pocket expenses for itemized fees and charges already incurred, such as the appraisal and credit report, do not get refunded. b.	VA_Guidelines.txt
0eb85eff-a489-4558-a7fc-cb605bc6b4ae	The One Percent Flat Fee If the lender has already collected the one percent flat fee from the borrower, the lender must refund the fee.	VA_Guidelines.txt
2df3b1c9-b29d-4bc4-9a4f-6a5d3aedc620	This applies to a loan that does not close for any reason, including the borrower going to another lender. 8-12 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 7: Fees and Charges That Can Be Included in the Loan Amount Change Date: November 8, 2012, Change 21 · This section has been updated to make minor grammatical edits. a.	VA_Guidelines.txt
3ef1b5b5-970b-42eb-9f87-d2e380f58870	All VA Loans For all types of VA loans, the loan amount may include the VA funding fee. No other fees and charges or discount points may be included in the loan amount for regular purchase or construction loans. Only refinancing loans may include other allowable fees and charges and discount points in the loan amount.	VA_Guidelines.txt
60b0637d-62bd-433d-9863-9c711aebeae6	Note: Maximum loan amounts are discussed in chapter 3. b. “Cash-out” Refinancing Loans For “cash-out” refinancing loans, allowable fees and charges and discount points (as discussed in Topic 2 of this chapter) may be paid from cash proceeds of the loan. Only the VA funding fee (and the cost of any energy efficiency improvements) can be added to increase the loan amount. c.	VA_Guidelines.txt
f52c2dd4-996e-4187-881e-23f62322d0f4	IRRRLs The following fees and charges may be included in an IRRRL: · Any allowable fees and charges discussed in section 2 of this chapter.	VA_Guidelines.txt
7cdd838b-2f47-45c3-9201-c698eb9b5cd1	This includes closing costs from the “Itemized Fees and Charges” list, the funding fee, and the lender’s flat charge. · However, there is one limitation unique to IRRRLs: While the borrower may pay any reasonable amount of discount points in cash, no more than two discount points can be included in the loan amount.	VA_Guidelines.txt
ff8f0e08-c6db-4b46-9d1a-18b4ba8bcd07	Continued on next page 8-13 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 7: Fees and Charges That Can Be Included in the Loan Amount, continued d.	VA_Guidelines.txt
2263d03f-c8b9-43f5-bf42-3a4bf932303f	Other Refinancing Loans The following information applies to any loan to refinance: · a construction loan, · an installment land sales contract, or · a loan assumed by the veteran at an interest rate higher than that for the proposed refinancing loan. The loan amount may include: · any allowable fees and charges discussed in Topic 2 of this chapter, and · reasonable discount points.	VA_Guidelines.txt
60fd6da5-a66b-4629-ab07-bd83eabefce9	Note: Maximum loan limits may not allow inclusion of the full amount of these items.	VA_Guidelines.txt
05c5942c-bd8d-4282-b2c1-9496042efa2c	The maximum loan amount will be the lesser of the: · sum of the outstanding balance of the loan being refinanced plus allowable fees and charges (other than the funding fee) plus discount points, or · VA reasonable value of the property, plus · VA funding fee, plus · cost of any energy efficiency improvements	VA_Guidelines.txt
298f85c4-779f-4b39-ad02-a6cfa90ccf98	. 8-14 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 8: The VA Funding Fee Change Date: November 8, 2012, Change 21 · Subsection b has been updated to note the expansion of eligibility for a funding fee waiver as a result of the Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012	VA_Guidelines.txt
c6f0e3a7-8f1f-4553-a2f5-09f98011c12d	. · Subsection h, Funding Fee Tables, has been updated to note that the present fee structure is extended through September 30, 2017, as a result of the law noted above. · This section has been updated to make minor grammatical edits. a.	VA_Guidelines.txt
fbee101e-e195-46c3-a8a1-fb3db55d3a28	The Lender’s Role The lender must: · verify the status of any veteran who may be exempt from paying the funding fee; · determine the amount of funding fee owed by any non-exempt borrower; · collect the appropriate fee from all non-exempt borrowers at loan closing; · electronically remit the funds to VA in a timely manner through the VA Funding Fee Payment System (FFPS) https://www.ffps.vba.va	VA_Guidelines.txt
c26d4c11-2655-4fa6-a7ea-e5882e3dcf59	.ffps.vba.va.gov/; · print proof of payment of the funding fee; and · submit proof that the funding fee has been paid or that the veteran is exempt from paying the funding fee to VA with the closed loan package.	VA_Guidelines.txt
aff60007-0560-4910-a59f-468f65bca27c	Note: The funding fee may be paid from loan proceeds or cash from borrower. b. Who is Exempt from Paying the Funding Fee?	VA_Guidelines.txt
171f975d-4a5e-4c3d-9d18-48d34ebc0428	The following persons are exempt from paying the funding fee: · Veterans receiving VA compensation for service-connected disabilities. · Veterans who would be entitled to receive compensation for service- connected disabilities if they did not receive retirement pay	VA_Guidelines.txt
0c41f1fa-6572-4691-baa5-b7982c9dddef	. · Veterans who are rated by VA as eligible to receive compensation as a result of pre- discharge disability examination and rating or on the basis of a pre-discharge review of existing medical evidence (including service medical and treatment records) that results in issuance of a memorandum rating	VA_Guidelines.txt
760d3889-2016-46c8-a03e-090d25b2625a	. · Veterans entitled to receive compensation, but who are not presently in receipt because they are on active duty. · Surviving spouses of veterans who died in service or from service- connected disabilities (whether or not such surviving spouses are veterans with their own entitlement and whether or not they are using their own entitlement on the loan).	VA_Guidelines.txt
934f7df1-1e39-459c-9bbd-c9939d99e67a	Continued on next page 8-15 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 8: The VA Funding Fee, continued c.	VA_Guidelines.txt
e4a6b14f-3fd8-4e14-b41a-87f536ae7baf	How to Verify Exempt Status The lender must verify exempt status by obtaining one of the following: · a properly completed and signed VA Form 26-8937, Verification of VA Benefits, indicating the borrower’s exempt status, · for a veteran who elected service retirement pay instead of VA compensation, a copy of the original VA notification of disability rating and documentation of the veteran’s	VA_Guidelines.txt
7ca29e52-ab5b-4c9c-8769-15cc8fad19c6	rating and documentation of the veteran’s service retirement income, or · indications on the Certificate of Eligibility (COE) that the borrower is entitled as an unmarried surviving spouse	VA_Guidelines.txt
ab681bea-23e8-4afc-b23a-cbfae7c108b0	.	VA_Guidelines.txt
d45d381c-2755-4fa2-9f04-adac229a8c63	Consult VA if the borrower’s status is unclear after reviewing the appropriate documents, or if conflicting information is found. d. Loan Submissions Involving Exempt Borrowers Submit a copy of the documentation used to verify exempt status with the closing package.	VA_Guidelines.txt
72819742-d028-4168-965d-9fadd087bad2	Exception: The lender does not have to submit the documentation if the borrower is an eligible surviving spouse, or the documentation had been previously provided to VA with the loan application as verification of the veteran’s income.	VA_Guidelines.txt
06c61d1a-2f0c-466f-8e2c-16b1838d79be	Note: A lender who believes that a servicemember may be exempt from payment of the funding fee based on a pre-discharge exam should contact the VA Regional Loan Center (RLC) of jurisdiction for assistance confirming the exempt status. e.	VA_Guidelines.txt
cb98b3c2-4ec0-41c6-8f57-5f1686eb866f	If the Exempt Status Cannot Be Determined If the veteran’s exempt status cannot be verified prior to loan closing, the funding fee must be remitted as if the borrower was not exempt. Indicate in the closing package that the veteran claims exempt status. VA will determine the borrower’s status and refund the funding fee if appropriate.	VA_Guidelines.txt
407983f6-ce34-43f9-ae12-5a15417b3e98	If the veteran has a pending disability compensation claim at the time of loan closing, the funding fee must be remitted as if the borrower was not exempt. Advise the veteran to contact the VA RLC to request a refund if it is later determined that the veteran is entitled to compensation retroactively to a date prior to loan closing.	VA_Guidelines.txt
672bc706-edb5-4d80-a66f-df65887d8d92	Reference: Refer to subsection j, “Refunding Overpayments to the Veteran,” in this section. f. How to Calculate the Funding Fee For all loans except IRRRLs, apply the appropriate percentage (from the funding fee tables) to the loan amount. If the funding fee is to be paid from loan proceeds, apply the percentage to the loan amount without the funding fee amount added to it.	VA_Guidelines.txt
35e16946-8526-4283-9adf-cf33a49c6125	For IRRRLs, calculate the funding fee by completing VA Form 26-8923, IRRRL Worksheet. Reference: For joint loans, see “Calculation of the Funding Fee” in chapter 7. Continued on next page 8-16 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 8: The VA Funding Fee, continued g.	VA_Guidelines.txt
8abd237b-c0f3-4ea8-bb14-a62987c121e2	How to Use the Funding Fee Tables The lender must find the appropriate percentage in the tables using the following parameters: · Is the veteran eligible for VA loan benefits through service in the regular military or the Reserves/National Guard? Examine the COE.	VA_Guidelines.txt
a5baf032-60ca-421d-b70f-974c6bd4f2be	Examine the COE. For Reserves/National Guard, the COE bears the notation, “RESERVES/NATIONAL GUARD - INCREASED FUNDING FEE,” and is buff-colored rather than green. · Is the veteran a subsequent user of VA home loan benefits or obtaining his or her first VA loan? Examine the COE.	VA_Guidelines.txt
b37b661c-4b77-4a96-9a0b-5d99a5d945ca	Examine the COE. An entitlement code of “5” indicates subsequent use, as does a loan number entered in the “Loan Number” column. · What type of loan is the veteran obtaining?	VA_Guidelines.txt
8445d73f-227f-4e86-8ee8-9dbd7aeced56	The funding fee varies depending upon whether the loan is a purchase or construction loan, an IRRRL, or a cash-out refinancing loan. · Is the veteran making a downpayment of at least five or ten percent? □ Calculate what percentage of the sales price of the property the veteran is remitting as a downpayment. □ The downpayment may come from the veteran’s own resources or borrowed funds.	VA_Guidelines.txt
af81dc4e-1a87-4bb0-9977-10f3edcb6a66	Except, if the purchase price exceeds the reasonable value of the property, the difference between the purchase price and the reasonable value must be paid by the veteran in cash without borrowing. · For construction loans only, equity in the secured property counts as a downpayment for calculating the funding fee. h.	VA_Guidelines.txt
35a6c96d-93ed-48e2-99dd-66a8fec1ac18	The Funding Fee Tables Purchase And Construction Loans Note: In 2011, funding fees were lower from October 1 through October 5, and November 18 through November 21. The enactment of Public Law 112- 56, signed November 21, 2011, established rates at the below levels through September 30, 2016.	VA_Guidelines.txt
079d26b8-1ada-42e7-93da-cbb44c74d5ad	The Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012, signed August 6, 2012, further extended the rates through September 30, 2017.	VA_Guidelines.txt
591fc46b-bcad-4565-b219-8e0b231035e6	Table 2: Purchase and Construction Loan Funding Fee Rates Type of Veteran Downpayment Percentage for Percentage for First time Use Subsequent Use Regular Military None 2.15% 3.3%* Regular Military 5% or more 1.5% 1.5% Regular Military 10% or more 1.25% 1.25% Reserves/National Guard None 2.4% 3.3%* Reserves/National Guard 5% or more 1.75% 1.75% Reserves/National Guard 10% or more 1.5% 1	VA_Guidelines.txt
fa126aac-f46d-48fd-990f-c8b88d0c914e	.75% Reserves/National Guard 10% or more 1.5% 1.5% Continued on next page 8-17 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 8: The VA Funding Fee, continued h.	VA_Guidelines.txt
9f5f9e61-d99c-44c5-b17c-86c9d319fa12	The Funding Fee Tables, continued Cash-Out Refinancing Loans: Note: There are no reduced funding fees for regular refinances based on equity. Reduced fees only apply to purchase loans where a downpayment of at least 5 percent is made.	VA_Guidelines.txt
86c08a1d-6a19-40bb-b96c-5972b9fac49c	Table 3: Cash-Out Refinancing Funding Fee Rates Type of Veteran Percentage for First time Percentage for Subsequent Use Use Regular Military 2.15% 3.3%* Reserves/National Guard 2.4% 3.3%* *The higher subsequent use fee does not apply to these types of loans if the veteran’s only prior use of entitlement was for a manufactured home loan.	VA_Guidelines.txt
0a179f97-097d-48b1-b63d-55e4dbb3cc19	Table 4: Other Loan Funding Fee Rates Type of Loan Percentage for Either Type of Veteran Whether First Time or Subsequent Use IRRRLs 0.50% Manufactured Home Loans (NOT 1.00% permanently affixed) Loan Assumptions 0.50% i. How and When to Remit the Funding Fee to VA Lenders must remit the VA funding fee via the VA FFPS https://www.ffps.vba.va.gov/; within 15 calendar days of loan closing.	VA_Guidelines.txt
dfc2013b-e7b7-4247-9652-157c5fc83f87	Lenders paying the fee more than 15 days after loan closing will automatically be assessed a four percent late fee. Fees paid more than 30 days late will automatically be assessed an interest charge in addition to the late fee. j. Refunding Overpayments to the Veteran A refund is appropriate if: · an exempt veteran paid a funding fee, or · a miscalculation of the fee caused an overpayment.	VA_Guidelines.txt
1d196cc1-8492-40af-bf7f-0d4eb1d1c2ff	Using the VA FFPS https://www.ffps.vba.va.gov/, lenders can make appropriate corrections that may result in refunds being due.	VA_Guidelines.txt
c323fa6c-60a6-4fb2-b100-14039dbd26a7	If the veteran was overcharged, the following applies: · A veteran who paid cash for the funding fee receives a cash refund for the amount of the overpayment. · In the case of a veteran who paid the funding fee out of loan proceeds, the lender must apply the overpayment against the loan balance.	VA_Guidelines.txt
10e1e053-afa0-48bf-b51c-b27657423cf1	Submit evidence to VA that the refund was applied to the loan’s principal balance	VA_Guidelines.txt
d05abfdf-67ec-4adf-a9f0-5b1b4a5597da	. 8-18 8-18 CHAPTER 9: LEGAL INSTRUMENTS, LIENS, ESCROWS, AND RELATED ISSUES Overview Topic Title Page 1 Security Instruments 9-2 2 Escape Clause and Notice of Value (NOV) 9-4 3 Title Limitations 9-5 4 Land Sale Contracts and Option Contracts 9-7 5 Secondary Borrowing 9-8 6 Purchase of Property with Encumbrances 9-11 7 Liens Covering Community-Type Services and Facilities 9-12 8 Power of Attorney	VA_Guidelines.txt
9b92718d-2803-4a12-b352-c2e3825de113	Services and Facilities 9-12 8 Power of Attorney (POA) 9-14 9 Lender Review of Sales Contracts on Proposed Construction 9-16 10 Escrow for Proposed Completion of Improvements 9-18 11 Hazard Insurance 9-20 12 Escrow for Taxes and Insurance 9-22 13 Homebuyer Assistance Program (HAP) 9-23 9-1 VA Lenders Handbook M26-7 Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues Topic 1: Security	VA_Guidelines.txt
5256024e-068e-458f-b8f9-ce187dd9d49f	Escrows, and Related Issues Topic 1: Security Instruments Change Date: July 30, 2019 · This chapter has been revised in its entirety	VA_Guidelines.txt
a0a797bc-a627-49bc-92f7-07aaf63d1d92	. a.	VA_Guidelines.txt
017b55c8-0d39-4c78-b665-397633e7f24a	Requirements Department of Veterans Affairs (VA) does not have a specific note or mortgage form that lenders must use for VA-guaranteed loans. VA regulations at 38 C. F. R. 36.4337 provide that security instruments used by a lender which are inconsistent with VA regulations in effect on the date the loan is closed will be considered amended and supplemented to conform to the regulations.	VA_Guidelines.txt
1d238395-7311-4b53-84fe-49d8cd7573c6	Lenders must ensure that the security instruments they use: · establish the required lien · comply with the laws and regulations governing VA’s home loan program · comply with applicable state laws, and · contain the following VA clauses: □ assumption approval clause, □ acceleration clause, □ funding fee clause, □ processing charge clause, and □ indemnity liability assumption clause. b.	VA_Guidelines.txt
0789b514-a3af-4f99-add7-a68deec09299	Assumption Approval Clause The instruments evidencing the loan must read substantially as follows: “THIS LOAN IS NOT ASSUMABLE WITHOUT THE APPROVAL OF THE DEPARTMENT OF VETERANS AFFAIRS OR ITS AUTHORIZED AGENT.” The loan assumption notice must appear conspicuously on at least one of the security instruments for the loan.	VA_Guidelines.txt
266057d2-5990-461b-a255-887581ba769b	Continued on next page 9-2 VA Lenders Handbook M26-7 Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues Topic 1: Security Instruments, continued c. Other Clauses The mortgage or deed of trust must contain four additional clauses related to the assumption of the loan.	VA_Guidelines.txt
00256607-2e7b-43b6-9a99-b661eab119c5	VA does not specifically require that these clauses also be included in the note, unless this is required under state law to make them enforceable.	VA_Guidelines.txt
2f69b406-7f3a-48b9-8584-d2dcb8a89bb3	Due to variations in local laws, the lender should obtain legal guidance as to any minor changes in these sample clauses which may be necessary to ensure that they have the effect required by the law and regulations; that is, the lender does not have to use the exact language provided for these four clauses.	VA_Guidelines.txt
0722abbc-c76d-4c34-9640-edd67a1dd328	Acceleration Clause This loan may be declared immediately due and payable upon transfer of the property securing such loan to any transferee, unless the acceptability of the assumption of the loan is established pursuant to 38 U. SC. 3714.	VA_Guidelines.txt
8d4c9d30-472c-417c-a431-d3df58b4ea9e	SC. 3714. Funding Fee Clause A fee equal to one-half of one percent of the balance of this loan as of the date of transfer of the property shall be payable at the time of transfer to the loan holder or its authorized agent, as trustee for the VA.	VA_Guidelines.txt
c9b2582e-9a4f-4205-b5fb-b9e03892afd1	If the assumer fails to pay this fee at the time of transfer, the fee shall constitute an additional debt to that already secured by this instrument, shall bear interest at the rate herein provided, and at the option of the payee of the indebtedness hereby secured or any transferee thereof, shall be immediately due and payable.	VA_Guidelines.txt
3251eaff-f27b-4fcd-ba13-208b5c4d4eb3	This fee is automatically waived if the assumer is exempt under the provisions of 38 U. S. C. 3729(c).	VA_Guidelines.txt
0f9cd7fc-5b8b-43de-a3f8-a70b1187392d	S. C. 3729(c). Processing Charge Clause Upon application for approval to allow assumption of this loan, a processing fee may be charged by the loan holder or its authorized agent for determining the creditworthiness of the assumer and subsequently revising the holder’s ownership records when an approved transfer is completed.	VA_Guidelines.txt
7efc49b1-fc1f-46f9-bd22-7f5eaace851a	The amount of this charge shall not exceed the maximum established by VA for a loan to which 38 U. S. C. 3714 applies. Indemnity Liability Assumption Clause If this obligation is assumed, then the assumer hereby agrees to assume all of the obligations of the Veteran under the terms of the instruments creating and securing the loan.	VA_Guidelines.txt
ad18bb27-b04a-4eb5-8ae2-e8d16211205d	The assumer further agrees to indemnify VA to the extent of any claim payment arising from the guaranty or insurance of the indebtedness created by this instrument. 9-3 VA Lenders Handbook M26-7 Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues Topic 2: Escape Clause and Notice of Value (NOV) Change Date: July 30, 2019 · This chapter has been revised in its entirety. a.	VA_Guidelines.txt
4bfee17d-e1db-41e1-9a3d-38fd605b0f46	Sales Contract The Escape Clause must be contained in the sales contract for all VA- guaranteed loans. The lender is responsible for ensuring that the paragraph is in the sales contract prior to closing. In the event the clause is not in the sales contract, VA may not guaranty the loan. b.	VA_Guidelines.txt
4495d84b-aa80-44e2-95dd-57b5e139e4bf	Builders and Realtors The builders/realtors that initiate contracts on new construction must ensure that the Escape Clause is in the contract and the contract is signed by the Veteran and seller. c. Upgrades Upgrades are not considered earnest money and the builder is not required to refund this money.	VA_Guidelines.txt
6fc93563-34c2-4da0-83be-23c5915de72d	When the NOV is below the sales contract price, this clause protects the Veteran with negotiation of the sales contract. d.	VA_Guidelines.txt
1cdd49e9-e82d-46e3-b0c3-373bfce1f52c	Escape Clause If the sales contract was signed by the Veteran prior to receipt of the NOV, the contract must include, or be amended to include, the clause below	VA_Guidelines.txt
03bb06b4-3b4d-4ee5-b4c7-13380899a85a	. “It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise or be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the reasonable value of the property established by the Department of Veterans Affairs.	VA_Guidelines.txt
1c55e8d5-40fb-460f-9a8d-d2297799e650	The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs (38 U. S. C. 501, 3703(c)(1)).” This clause may be found at 38 C. F.	VA_Guidelines.txt
822ac409-133f-4c02-83c9-102cb2bbc873	F. R. 36.4303(k)(4) in its entirety 9-4 VA Lenders Handbook M26-7 Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues Topic 3: Title Limitations Change Date: September 29, 2022 · Subsection d has been revised to include Attorney Opinion Letters. a. Estate if the Veteran in the Property VA regulations at 38 C. F.	VA_Guidelines.txt
b7d71474-e122-4b5a-97d6-69cb6367fa50	F. R. 36.4354 provide the parameters for the required estate of a Veteran in real property securing a VA-guaranteed loan. The lender is responsible for ensuring the loan conforms to these parameters. For IRRRLs (see Chapter 6 of this handbook).	VA_Guidelines.txt
243a0751-073a-414c-a733-03e8b7cc8ffa	For IRRRLs (see Chapter 6 of this handbook). A beneficial interest in a revocable Family Living Trust that ensures that the Veteran, or Veteran and spouse, have an equitable life estate, provided the lien attaches to any remainder interest and the trust arrangement is valid under state law. b.	VA_Guidelines.txt
bd28247d-9db3-4103-8b9e-b0b3472a3caa	Estate Title Generally, title to the estate shall be that which is acceptable to informed buyers, title companies, and attorneys in the community in which the property is situated. c. Mortgage Note or Deed VA does not allow an individual to take title to a property if that individual is not on either the mortgage note or a mortgage deed of trust.	VA_Guidelines.txt
c6223812-6706-4f55-9e0a-c011c1167072	Accordingly, if a spouse or other owner does not want to sign a mortgage note and be obligated for a VA-guaranteed home loan that individual must sign a mortgage deed of trust. d. Title Insurance VA does not require a lender making a VA loan or the Veteran-borrower to obtain title insurance or, where appropriate for the jurisdiction, an Attorney Opinion Letter.	VA_Guidelines.txt
10f7b285-4be3-4d5b-91ee-b562ed0a87ff	The lender may apply its own title insurance requirements to VA loan transactions. VA requires only that title to the property meet the standards described above in “Estate of the Veteran in the Property.” e. Restrictions on the Purchase or Resale of Properties Restrictions on the purchase or resale of the property are unacceptable to VA, with certain exceptions.	VA_Guidelines.txt
527680f0-6fda-43ed-b9d6-e3a3fa07e236	The lender must: · ensure any restrictions fall within the exceptions provided by VA regulations at 38 C. F. R. 36.4308 and 38 C. F. R. 36.4354; · consult VA where doubt exists; · obtain VA approval where required; and · fully inform the Veteran and obtain his or her consent to the restrictions in writing at the time of loan application.	VA_Guidelines.txt
771c18e0-7142-4faf-909c-37b627bc0022	Continued on next page 9-5 VA Lenders Handbook M26-7 Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues Topic 3: Title Limitations, continued f. Examples of Restrictions that Require VA Approval A lender may not accelerate a loan based on the sale of the secured property unless the acceptability of the assumption of the loan has not been established pursuant to Section 38 U. S.	VA_Guidelines.txt
89fe557a-0a29-4d72-aa04-a4596ae38305	S. C. 3714, except that: · Under 38 C. F. R. 36.4309(b), VA may guarantee a loan made through a state, territorial, or local government program where restrictions in the legal instruments require acceleration of the loan if it is assumed by a party ineligible for assistance under the program. · Such acceleration must be mandated by federal, state, territorial, or local law or regulation.	VA_Guidelines.txt
228cf072-7329-4075-af39-6ef722a2570d	VA may guarantee a loan made through a state or local government program, designed to assist low-or moderate-income individuals, which imposes resale and price restrictions on purchasers. Under such a program, if the property is resold within a period established by local law or ordinance, certain restrictions as set forth in 38 C. F.	VA_Guidelines.txt
a981d492-0f5e-411d-9869-9b6039193de5	F. R. 36.4354(b)(5)(iv)(A) on to whom the property may be sold, the resale price, and other restrictions approved by the Secretary may be applied.	VA_Guidelines.txt
d615feb0-6891-4814-b4ae-39128fa69b6c	VA may guarantee a loan on which a title restriction limits the sale, lease, or occupancy of the dwelling to persons based on age, including a prohibition against the permanent occupancy of the dwelling by children, provided such restriction complies with applicable federal law (38 U. S. C. 3704(c)).	VA_Guidelines.txt
c190d6fa-2d54-4ed7-a082-e7b1b2bb1cfc	S. C. 3704(c)). VA may refuse to approve a property with an age restriction if its operation would create an undue hardship upon the owner in the case of sudden, unforeseen events or be likely to result in an increased risk of loan default. g.	VA_Guidelines.txt
b2338852-e46d-43a4-b36f-c30ad84aec92	Examples of Restrictions That Do Not Require VA Approval Title to property involving reasonable encroachments, easements, servitudes, and reservations for water, timber, or subsurface rights, generally do not require VA approval. However, they must be taken into consideration in determining reasonable value.	VA_Guidelines.txt
28561928-5d4d-4490-b2a4-77bfd625155c	If any of these restrictions impact the basic livability of the property (meeting minimum property standards), VA approval is required. h. Effect of Title Limitations on Reasonable Value Title conditions or limitations must be shown on the NOV and considered by the appraiser in determining the reasonable value of the property.	VA_Guidelines.txt
8e0a6593-a412-464e-a41a-5b68139dd4c7	If the lender discovers, prior to loan closing, title conditions or limitations not shown on the NOV, the lender must have VA review the conditions and determine whether the value assigned to the property is materially affected.	VA_Guidelines.txt
26491a2c-c896-4a04-a735-a262387a66d2	Without such a determination by VA, the lender risks a later finding that the condition or limitation affects the reasonable value of the property to the extent that: · the loan will be ineligible for guaranty, or · a claim on the guaranty will be subject to reduction under 38 C. F.	VA_Guidelines.txt
5203d67f-9611-4b42-bb85-578860dd8254	F. R. 36.4325. 9-6 VA Lenders Handbook M26-7 Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues Topic 4: Land Sale Contracts and Option Contracts Change Date: July 30, 2019 · This chapter has been revised in its entirety. a.	VA_Guidelines.txt
94dd0a27-0e01-4120-b152-26cd211b0a58	Eligibility of Land Sale Contracts VA may guarantee an obligation secured by a land sale contract for the purchase of improved residential property in the same manner as any obligation secured by a mortgage or deed of trust. · The land sale contract must contain the mandatory clauses provided in Topic 1 of this chapter. · The contract must be recorded. b.	VA_Guidelines.txt
5ec41199-75eb-4672-814d-e1bc7ac5af6f	Refinance Land Sale Contracts Pursuant to Title 38 of the U. S.	VA_Guidelines.txt

d8a92610-f48a-4e59-8bdd-f1377020f00a

. 8-9 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 4: Other Parties Fees and Charges for the Veteran Borrower Change Date: November 8, 2010, Change 15 · This section has been updated to make minor grammatical edits. a.

VA_Guidelines.txt

bb3ad2f0-1806-4e12-9496-91bc656310b3

Policy The seller, lender, or any other party may pay fees and charges, including discount points, on behalf of the borrower. VA regulations limit charges “made against or paid by” the borrower. They do not limit the payment of fees and charges by other parties. b. Exception Excessive seller concessions are prohibited.

VA_Guidelines.txt

de112745-96a9-47b1-917e-67d22d706d93

Reference: See Topic 5 of this chapter. 8-10 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 5: Seller Concessions Change Date: November 8, 2010, Change 15 · This section has been updated to make minor grammatical edits. a.

VA_Guidelines.txt

0c46a2b4-e006-4a09-854b-d649861af6de

Definition For the purposes of this topic, a seller concession is anything of value added to the transaction by the builder or seller for which the buyer pays nothing additional and which the seller is not customarily expected or required to pay or provide. b.

VA_Guidelines.txt

0a2960d8-4091-4f92-976c-6931d33e11ff

Seller Concessions Seller concessions include, but are not limited to, the following: · payment of the buyer’s VA funding fee · prepayment of the buyer’s property taxes and insurance · gifts such as a television set or microwave oven · payment of extra points to provide permanent interest rate buydowns · provision of escrowed funds to provide temporary interest rate buydowns, and · payoff of

VA_Guidelines.txt

04d6e9d4-53ae-4bca-8974-4bfb9aac186b

temporary interest rate buydowns, and · payoff of credit balances or judgments on behalf of the buyer

VA_Guidelines.txt

b31eb6d7-c977-4cb9-b9fe-66f01f540704

.

VA_Guidelines.txt

0f019714-3928-44ab-b9d3-e103902b845b

Seller concessions do not include payment of the buyer’s closing costs, or payment of points as appropriate to the market. Example: If the market dictates an interest rate of 7½ percent with two discount points, the seller’s payment of the two points would not be a seller concession. If the seller paid five points, three of these points would be considered a seller concession. c.

VA_Guidelines.txt

6b7c1214-acd6-435e-a1bf-16b92c819550

The Problem In some localities, builders or sellers offer concessions as a competitive tool. In extreme cases, the concessions may entice unwary and unqualified veterans into home mortgages they cannot afford. The concessions may disguise the veteran’s inability to qualify for the loan. d.

VA_Guidelines.txt

08de469d-2d9d-4bbf-8647-ffe564204d46

The Four Percent Limit Any seller concession or combination of concessions which exceeds four percent of the established reasonable value of the property is considered excessive, and unacceptable for VA-guaranteed loans.

VA_Guidelines.txt

1673bd4e-ea24-4cae-b70a-892b024af92a

Do not include normal discount points and payment of the buyer’s closing costs in total concessions for determining whether concessions exceed the four percent limit. 8-11 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 6: What Happens to Fees and Charges If the Loan Never Closes?

VA_Guidelines.txt

e5c0735f-7693-46c0-b444-599c217b5ea6

Change Date: November 8, 2010, Change 15 · This section has been updated to make minor grammatical edits. a. Itemized Fees and Charges The borrower’s out-of-pocket expenses for itemized fees and charges already incurred, such as the appraisal and credit report, do not get refunded. b.

VA_Guidelines.txt

0eb85eff-a489-4558-a7fc-cb605bc6b4ae

The One Percent Flat Fee If the lender has already collected the one percent flat fee from the borrower, the lender must refund the fee.

VA_Guidelines.txt

2df3b1c9-b29d-4bc4-9a4f-6a5d3aedc620

This applies to a loan that does not close for any reason, including the borrower going to another lender. 8-12 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 7: Fees and Charges That Can Be Included in the Loan Amount Change Date: November 8, 2012, Change 21 · This section has been updated to make minor grammatical edits. a.

VA_Guidelines.txt

3ef1b5b5-970b-42eb-9f87-d2e380f58870

All VA Loans For all types of VA loans, the loan amount may include the VA funding fee. No other fees and charges or discount points may be included in the loan amount for regular purchase or construction loans. Only refinancing loans may include other allowable fees and charges and discount points in the loan amount.

VA_Guidelines.txt

60b0637d-62bd-433d-9863-9c711aebeae6

Note: Maximum loan amounts are discussed in chapter 3. b. “Cash-out” Refinancing Loans For “cash-out” refinancing loans, allowable fees and charges and discount points (as discussed in Topic 2 of this chapter) may be paid from cash proceeds of the loan. Only the VA funding fee (and the cost of any energy efficiency improvements) can be added to increase the loan amount. c.

VA_Guidelines.txt

f52c2dd4-996e-4187-881e-23f62322d0f4

IRRRLs The following fees and charges may be included in an IRRRL: · Any allowable fees and charges discussed in section 2 of this chapter.

VA_Guidelines.txt

7cdd838b-2f47-45c3-9201-c698eb9b5cd1

This includes closing costs from the “Itemized Fees and Charges” list, the funding fee, and the lender’s flat charge. · However, there is one limitation unique to IRRRLs: While the borrower may pay any reasonable amount of discount points in cash, no more than two discount points can be included in the loan amount.

VA_Guidelines.txt

ff8f0e08-c6db-4b46-9d1a-18b4ba8bcd07

Continued on next page 8-13 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 7: Fees and Charges That Can Be Included in the Loan Amount, continued d.

VA_Guidelines.txt

2263d03f-c8b9-43f5-bf42-3a4bf932303f

Other Refinancing Loans The following information applies to any loan to refinance: · a construction loan, · an installment land sales contract, or · a loan assumed by the veteran at an interest rate higher than that for the proposed refinancing loan. The loan amount may include: · any allowable fees and charges discussed in Topic 2 of this chapter, and · reasonable discount points.

VA_Guidelines.txt

60fd6da5-a66b-4629-ab07-bd83eabefce9

Note: Maximum loan limits may not allow inclusion of the full amount of these items.

VA_Guidelines.txt

05c5942c-bd8d-4282-b2c1-9496042efa2c

The maximum loan amount will be the lesser of the: · sum of the outstanding balance of the loan being refinanced plus allowable fees and charges (other than the funding fee) plus discount points, or · VA reasonable value of the property, plus · VA funding fee, plus · cost of any energy efficiency improvements

VA_Guidelines.txt

298f85c4-779f-4b39-ad02-a6cfa90ccf98

. 8-14 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 8: The VA Funding Fee Change Date: November 8, 2012, Change 21 · Subsection b has been updated to note the expansion of eligibility for a funding fee waiver as a result of the Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012

VA_Guidelines.txt

c6f0e3a7-8f1f-4553-a2f5-09f98011c12d

. · Subsection h, Funding Fee Tables, has been updated to note that the present fee structure is extended through September 30, 2017, as a result of the law noted above. · This section has been updated to make minor grammatical edits. a.

VA_Guidelines.txt

fbee101e-e195-46c3-a8a1-fb3db55d3a28

The Lender’s Role The lender must: · verify the status of any veteran who may be exempt from paying the funding fee; · determine the amount of funding fee owed by any non-exempt borrower; · collect the appropriate fee from all non-exempt borrowers at loan closing; · electronically remit the funds to VA in a timely manner through the VA Funding Fee Payment System (FFPS) https://www.ffps.vba.va

VA_Guidelines.txt

c26d4c11-2655-4fa6-a7ea-e5882e3dcf59

.ffps.vba.va.gov/; · print proof of payment of the funding fee; and · submit proof that the funding fee has been paid or that the veteran is exempt from paying the funding fee to VA with the closed loan package.

VA_Guidelines.txt

aff60007-0560-4910-a59f-468f65bca27c

Note: The funding fee may be paid from loan proceeds or cash from borrower. b. Who is Exempt from Paying the Funding Fee?

VA_Guidelines.txt

171f975d-4a5e-4c3d-9d18-48d34ebc0428

The following persons are exempt from paying the funding fee: · Veterans receiving VA compensation for service-connected disabilities. · Veterans who would be entitled to receive compensation for service- connected disabilities if they did not receive retirement pay

VA_Guidelines.txt

0c41f1fa-6572-4691-baa5-b7982c9dddef

. · Veterans who are rated by VA as eligible to receive compensation as a result of pre- discharge disability examination and rating or on the basis of a pre-discharge review of existing medical evidence (including service medical and treatment records) that results in issuance of a memorandum rating

VA_Guidelines.txt

760d3889-2016-46c8-a03e-090d25b2625a

. · Veterans entitled to receive compensation, but who are not presently in receipt because they are on active duty. · Surviving spouses of veterans who died in service or from service- connected disabilities (whether or not such surviving spouses are veterans with their own entitlement and whether or not they are using their own entitlement on the loan).

VA_Guidelines.txt

934f7df1-1e39-459c-9bbd-c9939d99e67a

Continued on next page 8-15 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 8: The VA Funding Fee, continued c.

VA_Guidelines.txt

e4a6b14f-3fd8-4e14-b41a-87f536ae7baf

How to Verify Exempt Status The lender must verify exempt status by obtaining one of the following: · a properly completed and signed VA Form 26-8937, Verification of VA Benefits, indicating the borrower’s exempt status, · for a veteran who elected service retirement pay instead of VA compensation, a copy of the original VA notification of disability rating and documentation of the veteran’s

VA_Guidelines.txt

7ca29e52-ab5b-4c9c-8769-15cc8fad19c6

rating and documentation of the veteran’s service retirement income, or · indications on the Certificate of Eligibility (COE) that the borrower is entitled as an unmarried surviving spouse

VA_Guidelines.txt

ab681bea-23e8-4afc-b23a-cbfae7c108b0

.

VA_Guidelines.txt

d45d381c-2755-4fa2-9f04-adac229a8c63

Consult VA if the borrower’s status is unclear after reviewing the appropriate documents, or if conflicting information is found. d. Loan Submissions Involving Exempt Borrowers Submit a copy of the documentation used to verify exempt status with the closing package.

VA_Guidelines.txt

72819742-d028-4168-965d-9fadd087bad2

Exception: The lender does not have to submit the documentation if the borrower is an eligible surviving spouse, or the documentation had been previously provided to VA with the loan application as verification of the veteran’s income.

VA_Guidelines.txt

06c61d1a-2f0c-466f-8e2c-16b1838d79be

Note: A lender who believes that a servicemember may be exempt from payment of the funding fee based on a pre-discharge exam should contact the VA Regional Loan Center (RLC) of jurisdiction for assistance confirming the exempt status. e.

VA_Guidelines.txt

cb98b3c2-4ec0-41c6-8f57-5f1686eb866f

If the Exempt Status Cannot Be Determined If the veteran’s exempt status cannot be verified prior to loan closing, the funding fee must be remitted as if the borrower was not exempt. Indicate in the closing package that the veteran claims exempt status. VA will determine the borrower’s status and refund the funding fee if appropriate.

VA_Guidelines.txt

407983f6-ce34-43f9-ae12-5a15417b3e98

If the veteran has a pending disability compensation claim at the time of loan closing, the funding fee must be remitted as if the borrower was not exempt. Advise the veteran to contact the VA RLC to request a refund if it is later determined that the veteran is entitled to compensation retroactively to a date prior to loan closing.

VA_Guidelines.txt

672bc706-edb5-4d80-a66f-df65887d8d92

Reference: Refer to subsection j, “Refunding Overpayments to the Veteran,” in this section. f. How to Calculate the Funding Fee For all loans except IRRRLs, apply the appropriate percentage (from the funding fee tables) to the loan amount. If the funding fee is to be paid from loan proceeds, apply the percentage to the loan amount without the funding fee amount added to it.

VA_Guidelines.txt

35e16946-8526-4283-9adf-cf33a49c6125

For IRRRLs, calculate the funding fee by completing VA Form 26-8923, IRRRL Worksheet. Reference: For joint loans, see “Calculation of the Funding Fee” in chapter 7. Continued on next page 8-16 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 8: The VA Funding Fee, continued g.

VA_Guidelines.txt

8abd237b-c0f3-4ea8-bb14-a62987c121e2

How to Use the Funding Fee Tables The lender must find the appropriate percentage in the tables using the following parameters: · Is the veteran eligible for VA loan benefits through service in the regular military or the Reserves/National Guard? Examine the COE.

VA_Guidelines.txt

a5baf032-60ca-421d-b70f-974c6bd4f2be

Examine the COE. For Reserves/National Guard, the COE bears the notation, “RESERVES/NATIONAL GUARD - INCREASED FUNDING FEE,” and is buff-colored rather than green. · Is the veteran a subsequent user of VA home loan benefits or obtaining his or her first VA loan? Examine the COE.

VA_Guidelines.txt

b37b661c-4b77-4a96-9a0b-5d99a5d945ca

Examine the COE. An entitlement code of “5” indicates subsequent use, as does a loan number entered in the “Loan Number” column. · What type of loan is the veteran obtaining?

VA_Guidelines.txt

8445d73f-227f-4e86-8ee8-9dbd7aeced56

The funding fee varies depending upon whether the loan is a purchase or construction loan, an IRRRL, or a cash-out refinancing loan. · Is the veteran making a downpayment of at least five or ten percent? □ Calculate what percentage of the sales price of the property the veteran is remitting as a downpayment. □ The downpayment may come from the veteran’s own resources or borrowed funds.

VA_Guidelines.txt

af81dc4e-1a87-4bb0-9977-10f3edcb6a66

Except, if the purchase price exceeds the reasonable value of the property, the difference between the purchase price and the reasonable value must be paid by the veteran in cash without borrowing. · For construction loans only, equity in the secured property counts as a downpayment for calculating the funding fee. h.

VA_Guidelines.txt

35a6c96d-93ed-48e2-99dd-66a8fec1ac18

The Funding Fee Tables Purchase And Construction Loans Note: In 2011, funding fees were lower from October 1 through October 5, and November 18 through November 21. The enactment of Public Law 112- 56, signed November 21, 2011, established rates at the below levels through September 30, 2016.

VA_Guidelines.txt

079d26b8-1ada-42e7-93da-cbb44c74d5ad

The Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012, signed August 6, 2012, further extended the rates through September 30, 2017.

VA_Guidelines.txt

591fc46b-bcad-4565-b219-8e0b231035e6

Table 2: Purchase and Construction Loan Funding Fee Rates Type of Veteran Downpayment Percentage for Percentage for First time Use Subsequent Use Regular Military None 2.15% 3.3%* Regular Military 5% or more 1.5% 1.5% Regular Military 10% or more 1.25% 1.25% Reserves/National Guard None 2.4% 3.3%* Reserves/National Guard 5% or more 1.75% 1.75% Reserves/National Guard 10% or more 1.5% 1

VA_Guidelines.txt

fa126aac-f46d-48fd-990f-c8b88d0c914e

.75% Reserves/National Guard 10% or more 1.5% 1.5% Continued on next page 8-17 VA Lenders Handbook M26-7 Chapter 8: Borrower Fees and Charges and the VA Funding Fee Topic 8: The VA Funding Fee, continued h.

VA_Guidelines.txt

9f5f9e61-d99c-44c5-b17c-86c9d319fa12

The Funding Fee Tables, continued Cash-Out Refinancing Loans: Note: There are no reduced funding fees for regular refinances based on equity. Reduced fees only apply to purchase loans where a downpayment of at least 5 percent is made.

VA_Guidelines.txt

86c08a1d-6a19-40bb-b96c-5972b9fac49c

Table 3: Cash-Out Refinancing Funding Fee Rates Type of Veteran Percentage for First time Percentage for Subsequent Use Use Regular Military 2.15% 3.3%* Reserves/National Guard 2.4% 3.3%* *The higher subsequent use fee does not apply to these types of loans if the veteran’s only prior use of entitlement was for a manufactured home loan.

VA_Guidelines.txt

0a179f97-097d-48b1-b63d-55e4dbb3cc19

Table 4: Other Loan Funding Fee Rates Type of Loan Percentage for Either Type of Veteran Whether First Time or Subsequent Use IRRRLs 0.50% Manufactured Home Loans (NOT 1.00% permanently affixed) Loan Assumptions 0.50% i. How and When to Remit the Funding Fee to VA Lenders must remit the VA funding fee via the VA FFPS https://www.ffps.vba.va.gov/; within 15 calendar days of loan closing.

VA_Guidelines.txt

dfc2013b-e7b7-4247-9652-157c5fc83f87

Lenders paying the fee more than 15 days after loan closing will automatically be assessed a four percent late fee. Fees paid more than 30 days late will automatically be assessed an interest charge in addition to the late fee. j. Refunding Overpayments to the Veteran A refund is appropriate if: · an exempt veteran paid a funding fee, or · a miscalculation of the fee caused an overpayment.

VA_Guidelines.txt

1d196cc1-8492-40af-bf7f-0d4eb1d1c2ff

Using the VA FFPS https://www.ffps.vba.va.gov/, lenders can make appropriate corrections that may result in refunds being due.

VA_Guidelines.txt

c323fa6c-60a6-4fb2-b100-14039dbd26a7

If the veteran was overcharged, the following applies: · A veteran who paid cash for the funding fee receives a cash refund for the amount of the overpayment. · In the case of a veteran who paid the funding fee out of loan proceeds, the lender must apply the overpayment against the loan balance.

VA_Guidelines.txt

10e1e053-afa0-48bf-b51c-b27657423cf1

Submit evidence to VA that the refund was applied to the loan’s principal balance

VA_Guidelines.txt

d05abfdf-67ec-4adf-a9f0-5b1b4a5597da

. 8-18 8-18 CHAPTER 9: LEGAL INSTRUMENTS, LIENS, ESCROWS, AND RELATED ISSUES Overview Topic Title Page 1 Security Instruments 9-2 2 Escape Clause and Notice of Value (NOV) 9-4 3 Title Limitations 9-5 4 Land Sale Contracts and Option Contracts 9-7 5 Secondary Borrowing 9-8 6 Purchase of Property with Encumbrances 9-11 7 Liens Covering Community-Type Services and Facilities 9-12 8 Power of Attorney

VA_Guidelines.txt

9b92718d-2803-4a12-b352-c2e3825de113

Services and Facilities 9-12 8 Power of Attorney (POA) 9-14 9 Lender Review of Sales Contracts on Proposed Construction 9-16 10 Escrow for Proposed Completion of Improvements 9-18 11 Hazard Insurance 9-20 12 Escrow for Taxes and Insurance 9-22 13 Homebuyer Assistance Program (HAP) 9-23 9-1 VA Lenders Handbook M26-7 Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues Topic 1: Security

VA_Guidelines.txt

5256024e-068e-458f-b8f9-ce187dd9d49f

Escrows, and Related Issues Topic 1: Security Instruments Change Date: July 30, 2019 · This chapter has been revised in its entirety

VA_Guidelines.txt

a0a797bc-a627-49bc-92f7-07aaf63d1d92

. a.

VA_Guidelines.txt

017b55c8-0d39-4c78-b665-397633e7f24a

Requirements Department of Veterans Affairs (VA) does not have a specific note or mortgage form that lenders must use for VA-guaranteed loans. VA regulations at 38 C. F. R. 36.4337 provide that security instruments used by a lender which are inconsistent with VA regulations in effect on the date the loan is closed will be considered amended and supplemented to conform to the regulations.

VA_Guidelines.txt

1d238395-7311-4b53-84fe-49d8cd7573c6

Lenders must ensure that the security instruments they use: · establish the required lien · comply with the laws and regulations governing VA’s home loan program · comply with applicable state laws, and · contain the following VA clauses: □ assumption approval clause, □ acceleration clause, □ funding fee clause, □ processing charge clause, and □ indemnity liability assumption clause. b.

VA_Guidelines.txt

0789b514-a3af-4f99-add7-a68deec09299

Assumption Approval Clause The instruments evidencing the loan must read substantially as follows: “THIS LOAN IS NOT ASSUMABLE WITHOUT THE APPROVAL OF THE DEPARTMENT OF VETERANS AFFAIRS OR ITS AUTHORIZED AGENT.” The loan assumption notice must appear conspicuously on at least one of the security instruments for the loan.

VA_Guidelines.txt

266057d2-5990-461b-a255-887581ba769b

Continued on next page 9-2 VA Lenders Handbook M26-7 Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues Topic 1: Security Instruments, continued c. Other Clauses The mortgage or deed of trust must contain four additional clauses related to the assumption of the loan.

VA_Guidelines.txt

00256607-2e7b-43b6-9a99-b661eab119c5

VA does not specifically require that these clauses also be included in the note, unless this is required under state law to make them enforceable.

VA_Guidelines.txt

2f69b406-7f3a-48b9-8584-d2dcb8a89bb3

Due to variations in local laws, the lender should obtain legal guidance as to any minor changes in these sample clauses which may be necessary to ensure that they have the effect required by the law and regulations; that is, the lender does not have to use the exact language provided for these four clauses.

VA_Guidelines.txt

0722abbc-c76d-4c34-9640-edd67a1dd328

Acceleration Clause This loan may be declared immediately due and payable upon transfer of the property securing such loan to any transferee, unless the acceptability of the assumption of the loan is established pursuant to 38 U. SC. 3714.

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SC. 3714. Funding Fee Clause A fee equal to one-half of one percent of the balance of this loan as of the date of transfer of the property shall be payable at the time of transfer to the loan holder or its authorized agent, as trustee for the VA.

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If the assumer fails to pay this fee at the time of transfer, the fee shall constitute an additional debt to that already secured by this instrument, shall bear interest at the rate herein provided, and at the option of the payee of the indebtedness hereby secured or any transferee thereof, shall be immediately due and payable.

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This fee is automatically waived if the assumer is exempt under the provisions of 38 U. S. C. 3729(c).

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S. C. 3729(c). Processing Charge Clause Upon application for approval to allow assumption of this loan, a processing fee may be charged by the loan holder or its authorized agent for determining the creditworthiness of the assumer and subsequently revising the holder’s ownership records when an approved transfer is completed.

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The amount of this charge shall not exceed the maximum established by VA for a loan to which 38 U. S. C. 3714 applies. Indemnity Liability Assumption Clause If this obligation is assumed, then the assumer hereby agrees to assume all of the obligations of the Veteran under the terms of the instruments creating and securing the loan.

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The assumer further agrees to indemnify VA to the extent of any claim payment arising from the guaranty or insurance of the indebtedness created by this instrument. 9-3 VA Lenders Handbook M26-7 Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues Topic 2: Escape Clause and Notice of Value (NOV) Change Date: July 30, 2019 · This chapter has been revised in its entirety. a.

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Sales Contract The Escape Clause must be contained in the sales contract for all VA- guaranteed loans. The lender is responsible for ensuring that the paragraph is in the sales contract prior to closing. In the event the clause is not in the sales contract, VA may not guaranty the loan. b.

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Builders and Realtors The builders/realtors that initiate contracts on new construction must ensure that the Escape Clause is in the contract and the contract is signed by the Veteran and seller. c. Upgrades Upgrades are not considered earnest money and the builder is not required to refund this money.

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When the NOV is below the sales contract price, this clause protects the Veteran with negotiation of the sales contract. d.

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Escape Clause If the sales contract was signed by the Veteran prior to receipt of the NOV, the contract must include, or be amended to include, the clause below

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. “It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise or be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the reasonable value of the property established by the Department of Veterans Affairs.

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The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs (38 U. S. C. 501, 3703(c)(1)).” This clause may be found at 38 C. F.

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F. R. 36.4303(k)(4) in its entirety 9-4 VA Lenders Handbook M26-7 Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues Topic 3: Title Limitations Change Date: September 29, 2022 · Subsection d has been revised to include Attorney Opinion Letters. a. Estate if the Veteran in the Property VA regulations at 38 C. F.

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F. R. 36.4354 provide the parameters for the required estate of a Veteran in real property securing a VA-guaranteed loan. The lender is responsible for ensuring the loan conforms to these parameters. For IRRRLs (see Chapter 6 of this handbook).

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For IRRRLs (see Chapter 6 of this handbook). A beneficial interest in a revocable Family Living Trust that ensures that the Veteran, or Veteran and spouse, have an equitable life estate, provided the lien attaches to any remainder interest and the trust arrangement is valid under state law. b.

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Estate Title Generally, title to the estate shall be that which is acceptable to informed buyers, title companies, and attorneys in the community in which the property is situated. c. Mortgage Note or Deed VA does not allow an individual to take title to a property if that individual is not on either the mortgage note or a mortgage deed of trust.

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Accordingly, if a spouse or other owner does not want to sign a mortgage note and be obligated for a VA-guaranteed home loan that individual must sign a mortgage deed of trust. d. Title Insurance VA does not require a lender making a VA loan or the Veteran-borrower to obtain title insurance or, where appropriate for the jurisdiction, an Attorney Opinion Letter.

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The lender may apply its own title insurance requirements to VA loan transactions. VA requires only that title to the property meet the standards described above in “Estate of the Veteran in the Property.” e. Restrictions on the Purchase or Resale of Properties Restrictions on the purchase or resale of the property are unacceptable to VA, with certain exceptions.

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The lender must: · ensure any restrictions fall within the exceptions provided by VA regulations at 38 C. F. R. 36.4308 and 38 C. F. R. 36.4354; · consult VA where doubt exists; · obtain VA approval where required; and · fully inform the Veteran and obtain his or her consent to the restrictions in writing at the time of loan application.

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Continued on next page 9-5 VA Lenders Handbook M26-7 Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues Topic 3: Title Limitations, continued f. Examples of Restrictions that Require VA Approval A lender may not accelerate a loan based on the sale of the secured property unless the acceptability of the assumption of the loan has not been established pursuant to Section 38 U. S.

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S. C. 3714, except that: · Under 38 C. F. R. 36.4309(b), VA may guarantee a loan made through a state, territorial, or local government program where restrictions in the legal instruments require acceleration of the loan if it is assumed by a party ineligible for assistance under the program. · Such acceleration must be mandated by federal, state, territorial, or local law or regulation.

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VA may guarantee a loan made through a state or local government program, designed to assist low-or moderate-income individuals, which imposes resale and price restrictions on purchasers. Under such a program, if the property is resold within a period established by local law or ordinance, certain restrictions as set forth in 38 C. F.

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F. R. 36.4354(b)(5)(iv)(A) on to whom the property may be sold, the resale price, and other restrictions approved by the Secretary may be applied.

VA_Guidelines.txt

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VA may guarantee a loan on which a title restriction limits the sale, lease, or occupancy of the dwelling to persons based on age, including a prohibition against the permanent occupancy of the dwelling by children, provided such restriction complies with applicable federal law (38 U. S. C. 3704(c)).

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S. C. 3704(c)). VA may refuse to approve a property with an age restriction if its operation would create an undue hardship upon the owner in the case of sudden, unforeseen events or be likely to result in an increased risk of loan default. g.

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Examples of Restrictions That Do Not Require VA Approval Title to property involving reasonable encroachments, easements, servitudes, and reservations for water, timber, or subsurface rights, generally do not require VA approval. However, they must be taken into consideration in determining reasonable value.

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If any of these restrictions impact the basic livability of the property (meeting minimum property standards), VA approval is required. h. Effect of Title Limitations on Reasonable Value Title conditions or limitations must be shown on the NOV and considered by the appraiser in determining the reasonable value of the property.

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If the lender discovers, prior to loan closing, title conditions or limitations not shown on the NOV, the lender must have VA review the conditions and determine whether the value assigned to the property is materially affected.

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Without such a determination by VA, the lender risks a later finding that the condition or limitation affects the reasonable value of the property to the extent that: · the loan will be ineligible for guaranty, or · a claim on the guaranty will be subject to reduction under 38 C. F.

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F. R. 36.4325. 9-6 VA Lenders Handbook M26-7 Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues Topic 4: Land Sale Contracts and Option Contracts Change Date: July 30, 2019 · This chapter has been revised in its entirety. a.

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Eligibility of Land Sale Contracts VA may guarantee an obligation secured by a land sale contract for the purchase of improved residential property in the same manner as any obligation secured by a mortgage or deed of trust. · The land sale contract must contain the mandatory clauses provided in Topic 1 of this chapter. · The contract must be recorded. b.

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Refinance Land Sale Contracts Pursuant to Title 38 of the U. S.

VA_Guidelines.txt