| Lender's
Use of 1% Flat Charge |
The
lender's maximum allowable flat charge of 1% 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." 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).
See below for examples of items that cannot be charged to the veteran as "itemized
fees and charges." This topic 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.
|
| Attorney's
Fees |
The
lender may not charge the borrower for attorney's fees.
Reasonable fees for title examination work and title
insurance can be paid, however, 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.
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.
|
| 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.
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. 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.
|
| Prepayment
Penalties |
A
veteran obtaining a VA refinancing loan cannot use loan
proceeds to pay penalty costs for prepayment of an existing
lien.
A veteran purchasing a property with a VA loan cannot pay penalty costs
required to discharge any existing liens on the seller's property. |
