Itemized Fees and Charges a Veteran May Pay

For any itemized fee that relates to services performed by a third party (like credit reports, appraisals, or flood determinations), the amount you pay must be limited to the actual charge paid to that third party. The lender is strictly prohibited from marking up these fees. For example, if the lender pays $30 for a credit report, they can only charge you $30. They cannot charge $35 to cover their own handling or administrative effort. This rule prevents lenders from generating additional profit through “junk fees” disguised as third-party service charges

You generally cannot be charged for postage or mailing charges as these are considered overhead covered by the lender’s 1% flat fee. However, there is a specific exception for refinancing loans. For refinancing only, you can pay charges for Federal Express, Express Mail, or similar services, but only when the per diem interest cost you save by using the expedited service exceeds the cost of the special handling. In all other cases, such as purchase loans, these mailing and courier fees are unallowable itemized charges and must be absorbed by the lender.

Yes, you may pay a fee for the Mortgage Electronic Registration System (MERS). MERS is a system used by the mortgage industry to electronically track the ownership of the beneficial interest in a loan and its servicing rights. This is considered an allowable itemized fee. This is a specific exception to the general rule that administrative overhead must be covered by the lender’s 1% flat charge. By registering the loan with MERS, lenders simplify the process of transferring servicing rights in the future. As an allowable fee, it can be charged in addition to the origination fee.

“Prepaid items” refer to costs associated with the property that must be paid in advance at closing, and you are allowed to pay these. This includes that portion of taxes, assessments, and similar items for the current year that are chargeable to the borrower. It also covers the initial deposit required to set up the tax and insurance escrow account. Furthermore, you may pay the required hazard insurance premiums, including flood insurance if the property is in a special flood hazard area. These are ongoing costs of homeownership rather than administrative fees for the loan process.

You are permitted to pay for a survey if it is required by either the lender or you as the veteran. A survey outlines the physical boundaries of the property and identifies any encroachments. However, if the loan involves a condominium, any charge for a survey must have the prior approval of the VA. Importantly, you should not pay a duplicate fee. For example, if the lender elects to use an existing survey from a previous transaction rather than ordering a new one, they cannot charge you a fee for a service that was not performed.

Yes, fees for title examination and title insurance are allowable itemized charges that you may pay. These fees cover the work required to ensure the property title is clear of defects and to provide insurance protecting against future title claims. Additionally, if the lender determines that an environmental protection lien endorsement to the title policy is necessary, the cost of this specific endorsement may also be charged to you. These fees generally go to third-party title companies or attorneys (for title work only) and are distinct from the attorney fees for document preparation, which you cannot pay.

You may be charged the actual amount for a determination of whether the property is located in a special flood hazard area, provided this determination is made by a third party who guarantees its accuracy. Additionally, you are permitted to pay a charge for a life-of-the-loan flood determination service purchased at the time of origination. However, you cannot be charged a fee if the flood zone determination is made internally by the lender or the VA appraiser. As with other itemized fees, you may only be charged the actual cost the lender pays to the third party.

You are allowed to pay for the credit report obtained by the lender to evaluate your creditworthiness. If your loan is processed using Automated Underwriting, you may pay an evaluation fee (typically around $50) in lieu of a standard credit report charge. For cases requiring manual underwriting (referred to as “Refer” cases), you may pay for a merged credit report. Crucially, the amount you pay must be limited to the actual charge paid by the lender to the third-party credit provider. The lender is prohibited from adding a handling fee or markup to this specific cost.

Yes, you are permitted to pay for recording fees and recording taxes necessary to complete the transaction. These costs are considered allowable itemized charges under VA regulations. This category covers the official charges incident to recording the deed and mortgage documents with the appropriate local government entity. It ensures that your ownership and the lender’s lien are properly documented in public records. While these fees are allowable, they must be reasonable and customary. Unlike some administrative costs which must be covered by the lender’s flat fee, recording charges are distinct third-party fees that pass directly to the government authority.

As a Veteran borrower, you are permitted to pay the fee for the VA-assigned appraiser and any required compliance inspections to ensure the property meets minimum requirements. If you request a reconsideration of value because you believe the initial appraisal was too low, you may pay for a second appraisal. However, you are strictly prohibited from paying for an appraisal requested by the lender or seller for their own reconsideration purposes. Furthermore, you cannot be charged for appraisals requested by parties other than yourself or the lender. All appraisal charges must represent reasonable and customary amounts for the area.