VA to Cover Extra Costs Amid Home Loan Confusion
COLUMBIA, S.C. -- The U.S. Department of Veterans Affairs will cover extra costs for veterans who struck deals on home loans and faced the possibility of higher fees amid confusion over a federal law change, the agency said Saturday.
The problem involves a Sept. 8 notice from the Department of Veterans Affairs loan operations that said certain fees would be lower beginning Saturday. But Congress delayed those lower fee rates from taking effect until November in legislation awaiting President Obama's signature.
Lenders, who didn't know about the change, made loan deals based on the lower rate, including Scott Thigpen, who runs The Citizens Bank in South Carolina's mortgage operations. Thigpen said Veterans Affairs created a problem that left lenders with the choice of imposing higher fees on mortgages heading into closing and delaying those deals or absorbing the higher costs.
"Somebody had to have jumped the gun," Thigpen said. Thigpen said a Sumter veteran was to close a deal on a $160,000 loan on Monday and faced a $1,200 fee increase. The bank decided to cover the additional costs.
That won't be needed now after Veterans Affairs Secretary Eric K. Shinseki said the VA will waive fee changes for loans in closing.
The decision was effective Friday evening, Taylor said.
"That makes us feel a whole lot better on closing our loan on Monday," Thigpen said.
The agency posted a notice on its website saying lenders shouldn't submit payments for loans closed on Saturday or afterward until further notice and that the fee issues should be resolved in the next several days.
On Friday, Amy Mitchell, spokeswoman for the U.S. House Committee on Veterans Affairs, said the flap should never have happened. The House had planned to keep the fees as they have been for some time and then reduce them in November.
"We've done everything we can to prevent this exact situation from happening," Mitchell said. "And we're very sorry this happened to veterans through their miscommunication."
The fees help offset the costs of loan defaults. They've been lower in the past, but rose after the national mortgage crisis that increased loan defaults and foreclosures.
The VA expects to close about 330,000 loans this year, or nearly 1,000 a day.
The loan fee change is part of a bill that pays for improvements in veterans facilities.