What is Happening in the Mortgage Market

I thought I would update everyone on the current state of VA funding fees. It seems congress just can't seem to make up thier minds.

Bottom line; we are going back to the old fees.

Here is a copy of the letter issued by the VA.

1. Purpose. The President signed H.R. 2646, Veterans Health Facilities Act Capital Improvement Act of 2011 on October 5, 2011. The bill includes a provision resulting in funding fees reverting to the same rates that existed prior to October 1, 2011 for loans closed October 6, 2011 through and including November 17, 2011. Rates for loans closed prior to enactment of H.R. 2646 and for loans closed on or after November 18, 2011 are discussed below.

2. Fee Changes

a. Loans closed October 1 through October 5, 2011: Funding fees for loans closed on these dates will be those cited in the Department of Veterans Affairs (VA) Circular 26- 11-12, dated September 8, 2011.

b. Loans closed October 6 through and including November 17, 2011: Funding fees for loans closed during this period, will be the same rates in effect prior to October 1, 2011. The fees can be found in the VA Lender’s Handbook, Chapter 8, Topic 8.

c. Loans closed on or after November 18, 2011: Funding fees for loans closed on or after November 18, 2011 will be reduced as shown on the attached fee schedule.  fee schedule

d. Funding fees for other loans: Funding fees for Interest Rate Reduction Refinancing Loans (IRRRLs) and Assumptions will not change. They will remain at .50 percent.

3. Possibility of Future Funding Fee Changes. VA believes it likely that Congress will pass other legislation in the coming weeks that will make additional changes to the funding fee structure. Should this occur, VA will immediately publish a notice on www.benefits.va.gov/homeloans and the VA Funding Fee Payment System (FFPS), and release another Circular once any such bill becomes law. Lenders should closely monitor VA FFPS for information on funding fee changes.

4. Waiver of the Difference in Funding Fees. For cases in which lenders have closed loans based on lower funding fees cited in the Good Faith Estimate (GFE) rather than the higher fees provided in HR 2646, the Secretary, under existing authority, will waive the difference in the fees. Specifically, VA will waive the right to collect the difference in fees (between the lower October 1 rates and the higher H.R. 2646 rates) for loans for which a GFE was prepared prior to October 6 based on the lower fees, and that was closed after the enactment of H.R. 2646. Instructions on how to process and obtain that waiver are forthcoming, via a Circular.

5. Rescission: This circular is rescinded on October 1, 2012.

By Direction of the Under Secretary for Benefits

Michael J. Frueh
Acting Director
Loan Guaranty Service

For more information and to view a great video please visit my website or just call me at 972-661-5136. 

Don’t be fooled by anyone claiming to be “The” VA lender.  The VA does not make mortgages, they only guarantee them through authorized lenders.