Key facts
- Legislation moving through Congress, H.R. 6047, proposes to increase fees on VA loans to offset costs of expanded veteran benefits.
- The fee for the Interest Rate Reduction Refinance Loan (IRRRL) program could rise from 0.5% to 1.42%, and the VA assumption fee would double from 0.5% to 1%.
- These changes are part of the Take Care of America’s Veterans Act, a package of over 60 bills.
- The proposed fee increases are estimated to add an average of $8,550 over the life of a refinanced loan.
- The bill aims to increase benefits for severely disabled veterans and survivors, and extend VA home loan eligibility to National Guard and Reserve members.
- The Mortgage Bankers Association has expressed concerns and recommended alternative funding sources.
Legislation advancing in Congress, specifically H.R. 6047, proposes to significantly increase fees associated with VA home loans, particularly for refinancing. The proposed changes aim to offset the costs of expanding benefits for severely disabled veterans and survivors, as well as extending eligibility for National Guard and Reserve members. The Interest Rate Reduction Refinance Loan (IRRRL) fee could jump from 0.5% to 1.42%, and the VA assumption fee would double to 1%.
Industry groups, such as the Broker Action Coalition and the Mortgage Bankers Association (MBA), are mobilizing to oppose these fee hikes. The BAC has initiated a call to action for industry professionals to contact their legislative representatives, noting that the fee increases disproportionately impact active-duty military and those without a VA disability rating. The MBA has recommended that lawmakers seek alternative funding sources, arguing that the proposed changes could create greater challenges for veteran homeowners and homebuyers.
Proponents of the bill emphasize that the increased benefits are crucial for veterans with catastrophic injuries and illnesses. The legislation is named in part after Sharri Briley, widow of an Army pilot killed in Somalia, and Eric Edmundson, a former Army sergeant injured in Iraq. While some veterans, like James Nelson, understand the need to support disabled veterans, concerns remain about the impact on other borrowers and the potential for administrative misuse of funds.
Gay Veale of Vetted VA suggests that instead of raising fees, policymakers should expand eligibility for VA loans to increase participation and fee revenue, proposing easier qualification for National Guard and Reserve members and allowing benefit transfers to dependents. The bill has passed the House of Representatives and is progressing in the Senate.