1.Key Highlights

Under Chapter 8, Topic 2.c of the VA Lenders Handbook, veterans may pay a “reasonable and customary” amount for incidental fees—such as recording and title fees—but these must align with actual costs incurred by the lender. If a fee or service has already been paid for by someone else, or if it’s included in the lender’s one percent flat fee, it cannot be charged to the veteran again.

Beyond aligning fees with real costs, lenders must retain invoices or other documentation that verifies and justifies the amounts passed on to veterans. Acceptable documentation can include detailed invoices, recorded deeds, or any record that clearly identifies the transaction and the associated fee. If a lender cannot produce a matching invoice for a fee, the veteran must be refunded, or a principal reduction must be made if the cost was financed.

Appraisals and credit reports have been common points of concern. Frequently, lenders will pay for these services upfront and then collect payment from the veteran at closing. The VA has confirmed this process is acceptable as long as the final charge does not exceed the actual invoice amount. For appraisals, lenders may only charge up to the state’s maximum allowable fee; any charges above that limit must be justified with an invoice. Credit report fees must similarly be verified with documentation retained in the loan file.

Finally, while the VA may authorize local variances (including certain buyer-broker fees) based on property location, all charges must still reflect actual costs. Most maximum dollar amounts have been removed from the VA’s local fee variance list, but any fee charged must still be documented as reasonable, customary, and not duplicative.

2.Effective Date

Circular 26-24-19 is now in effect for any VA loans closed on or after January 1, 2025. Given that it is now January 4, 2025, it’s crucial for lenders to ensure their practices and documentation processes are fully compliant with these updated requirements.

3.Bottom Line

With Circular 26-24-19 officially active, proper documentation of fees charged to veterans is more important than ever. Keep invoices on file to confirm you’re only charging for actual costs, and if you can’t document a fee, be prepared to issue a refund or a principal reduction. If you have any questions, feel free to contact us. We’re always here to help navigate these evolving VA requirements.