Loan Modification

New VA Loan GFE Rules

By Blaughridge

The VA has recently offered some insight into how lenders should disclose loan origination fees in relation to the industry?s new Good Faith Estimate.

Lenders and prospective military homebuyers alike should probably stop and take notice: Starting May 1, all VA loan applications must adhere to these new disclosure procedures.

Revisions to the Real Estate Settlement Procedures Act, or RESPA, aimed to make the home-buying process more transparent for consumers. But there?s been some confusion among VA mortgage lenders regarding exactly how those origination fees should be explained.

The revamped Good Faith Estimate lumps together all of the fees originators receive from the purchase. The Department of Veterans Affairs limits origination fees for veterans to one percent, along with a few other acceptable fees.

The VA offers lenders a choice for disclosing fees when their total origination fee is higher than that 1 percent threshold.

If there?s room, lenders can itemize their charges in the 800 lines of the HUD-1Settlement Statement. A new origination statement must be created if there isn?t enough space. That new statement must also be signed and dated by the borrower.

Lenders who would rather just include a separate origination statement should not create an itemized list for the HUD-1 document.

VA officials have suggested that lenders start implementing these guidelines at once to prepare for the May 1 deadline.

The agency also recently noted that lenders do not need to issue an Interest Rate and Discount Disclosure Statement for VA loans when they?ve already used the new Good Faith Estimate and HUD-1 documentation.

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Full post as published by Blown Mortgage on January 19, 2010 (boomark / email).