Key facts
- Legislation H.R. 6047 proposes to increase VA loan fees to fund expanded benefits for disabled veterans and survivors.
- The IRRRL fee would rise from 0.5% to 1.42%, and the VA assumption fee would double from 0.5% to 1%.
- The Broker Action Coalition estimates an average increase of $8,550 over the life of a refinanced loan.
- The Mortgage Bankers Association suggested alternative funding sources instead of fee increases.
- The bill also aims to expand VA home loan eligibility for National Guard and Reserve members.
- Industry professionals argue the fee hikes disproportionately affect active-duty service members and extend loan recoupment periods.
Legislation advancing in Congress, H.R. 6047, proposes to increase fees on U.S. Department of Veterans Affairs (VA) loans to fund expanded benefits for severely disabled veterans and survivors. The bill, which passed the House and is moving in the Senate, would raise the fee for the Interest Rate Reduction Refinance Loan (IRRRL) program from 0.5% to 1.42% and double the VA assumption fee from 0.5% to 1%.
Industry groups, including the Broker Action Coalition and the Mortgage Bankers Association (MBA), are pushing back against the proposed fee hikes. Brendan McKay of the Broker Action Coalition estimates the changes could increase the cost of refinancing by an average of $8,550 over the life of the loan, potentially extending the recoupment period to nearly five years from the current 1.5 years. Gay Veale of Vetted VA expressed concern that the fee increases disproportionately impact active-duty military personnel and suggested alternative funding methods.
The MBA recommended that Congress seek alternative offsets, such as designated appropriations or the use of unobligated funds, rather than increasing fees. The organization also noted that revisions to the bill's language could remove a 10-year sunset on fee increases, creating greater challenges for veteran homeowners.
While the primary intent of the bill is to enhance benefits for veterans, including those with severe disabilities and expanding eligibility for National Guard and Reserve members, industry representatives argue that the fee increases create an unintended financial burden. Kimber White of the National Association of Mortgage Brokers stated that nearly tripling the IRRRL fee reduces the immediate financial relief provided by lower interest rates.