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VA Expands Funding Fee Waiver Rules

Updated December 6, 2018
2 min read

The passage of Public Law 112-154, the Honoring America's Veterans and Caring for Camp Lejeune Families Act of 2012, meant a great many changes to the VA loans program in 2012. One of those changes includes expanding the criteria for VA loan funding fee exemptions, and as a result, the Department of Veterans Affairs has changed the way it evaluates applications for those funding fee waivers.

The VA states:

"VA already had the authority to waive the funding fee for active duty servicemembers who close a loan based on a pre-discharge examination and rating. The law now permits a waiver based on a pre-discharge review of existing medical evidence (for example, service medical and treatment records), that results in issuance of a memorandum rating by VA."

How do veterans benefit from these changes? According to VA Circular 26-12-9, "This accommodates those servicemembers who, for whatever reason, cannot undergo a full examination, but for whom existing medical records demonstrate they will be entitled to VA compensation upon discharge from active duty."

This is important factor for some veterans who deserve a VA loan funding fee waiver, but under the old way of doing business, could not get their waiver in time to close the loan.

The VA goes a bit further with these changes, stating "Lenders are reminded to ask any active duty loan applicant early in the loan process if he/she filed a claim for VA compensation while on active duty. If the response is `yes,’ the lender must send VA Form 26-8937, Verification of Benefits, to VA for review. VA will then request a memorandum rating to determine if the servicemember will receive compensation upon discharge. Once that determination has been made, VA Form 26- 8937 will be returned to the lender, noting the servicemember is exempt from the funding fee."

Borrowers should know VA loan funding fee exemption data for veterans who are already discharged and receiving VA benefits can be found "on the Certificate of Eligibility, or in the case of IRRRLs, the information received when ordering a case number. This provision of the law took effect on August 6, 2012."

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Veterans United Home Loans is a VA approved lender; Mortgage Research Center, LLC – NMLS #1907 ( Not affiliated with the Dept. of Veterans Affairs or any government agency. Not available in NV or NY. 1400 Veterans United Dr., Columbia, MO 65203. Equal Housing Lender