VA Loan List of Allowable and Non-Allowable Closing Costs

Friday, 27 January 2012 19:59

Allowable Fees
The following fees are always allowed regardless of the 1% origination fee being charged:
Appraisal fee – per allowable maximum appraisal fee schedule for that state
Compliance inspection – only if required by the NOV
Credit report – in most cases it should not exceed $50
Recording fees, taxes and stamps
Prorated tax and insurance escrow
Hazard insurance – if it was not paid directly out of pocket by veteran outside closing
Survey and plot plan
Title insurance, title policy, title exam, title search, title endorsement and any fees required to prepare title work
Environmental protection lien endorsement
1% origination fee
VA funding fee
Discount points
Closing protection letter – sometimes just listed as "CPL" (should not exceed $35, except in Pennsylvania it is $75)
Interthinx DISSCO fraud protection report
MERS fee
Well and Septic inspection fees
Express mail fees (only for cashout refinances and IRRRL’s) – actual cost should be reasonable. If not question it (over $50 should be questioned – ask for actual invoice)

Unallowable Fees
The following fees are always un-allowed if the 1% origination fee is charged:
Lender’s appraisal – the veteran can only be charged for 1 appraisal unless VA deemed a second appraisal mandatory
Lender’s inspection – if it is not required on the appraisal/NOV, it can not be charged to the veteran
Settlement fee, escrow fee, closing fee
Document preparation fee
Underwriting fee
Processing fee
Application fee – a veteran can be charged up front the cost of the appraisal and credit report to ensure the loan officer is not stuck with those fees if the veteran walks away from the deal.
Pest inspection fee
Attorney fees if for something other than title work
Assignment fee
Copying fee
E-mail fee
Fax fee
Photographs
Postage fees if not a cashout refinance or IRRRL
Amortization schedule
Notary fee
Commitment fee
Trustee fee
Truth in lending fee
Mortgage broker fee
Tax service fee

The above list is not all inclusive. You may find something other than those listed. These fees cannot be charged by the lender, title company or investor. Please refer those to the Loan Production Officer for review.

Unless a fee is mandated by a city, county or state, and it is not on the allowable fee list, it cannot be charged to the veteran if a 1% origination fee was charged.

If the 1% origination fee was not charged, the above list of unallowable fees can be charged to the veteran provided they do not exceed 1%. If the lender chose to charge the veteran a ½% origination fee, then items from the unallowable list can be charged provided they do not exceed ½% of the loan amount.

Finally, there are some fees that can never be paid by the veteran regardless of whether the 1% origination fee was paid or not. Those are:
Termite/Pest Inspection
Attorney Fee Charged as a Benefit to the Lender
Mortgage Broker Fee
Realtor Commission
Prepayment penalties
HUD/FHA Inspection Fees for Builders