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Question: Will a mortgage lender or broker still be permitted to obtain reimbursement from a VA borrower if the lender/broker pays the appraisal fee upfront in relation to a VA loan transaction?

 Answer:

No. On September 13, 2024, the Department of Veterans Affairs (VA) published Circular 26-24-19: Invoice Requirements for Itemized Fees and Charges and Updates to the State Fees & Charges Deviations List, which is effective January 1, 2025. The Circular clarifies when a lender needs to provide an invoice to support itemized fees charged to or paid by the borrower for VA loan transactions. Specifically, the Circular states:

• Lenders must support the amount charged to, or paid by, the VA borrower with an invoice or other documentation that clearly identifies the transaction and verifies the fee and associated charge (example: a recorded deed that displays the cost of recordation). If the lender is unable to support the charge with an invoice, a refund must be provided to the VA borrower.
• Lenders may not charge the VA borrower for services already paid for by another party. This means if the lender or mortgage broker paid for a VA appraisal, the borrower cannot reimburse the lender or mortgage broker at any time, whether at closing or prior to closing.
• VA may authorize local fee variances for additional fees and charges that may be charged to and paid by the VA borrower based on the location of the subject property. VA publishes a State Fees and Charges Deviations List on its website. Effective immediately, VA will no longer publish maximum dollar amounts for most fees and charges on this list.

Note, the Circular does not address, or apply to, the lender’s one percent allowable fee.