Some disabled veterans no longer would be exempt from VA loan funding fees as part of proposed changes mandated by a House bill that expands health care benefits for “blue water” Vietnam veterans and others.
The Blue Water Navy Vietnam Veterans Act of 2017 would make nearly 90,000 veterans eligible for disability benefits connected to exposure to Agent Orange and other defoliants. While those who served in-country are presumed to have contacted such chemicals during their service, a 2002 policy change revoked that presumption for those who served aboard ships off Vietnam’s coast.
Reversing that change, and providing other benefits outlined in the bill, would cost more than $1 billion. To cover that cost, lawmakers plan to adjust the VA funding fee tables, which charge different fee percentages depending on the type of loan, the amount of down payment, the beneficiaries’ type of service, and whether the beneficiary has used the VA-backed loan program in the past.
The House passed the bill on Monday and awaits the Senate’s move.
VA says some lenders are offering cash advances that go against regulations.
The proposed changes are below, with some rates rising by half a percentage point or less, and others falling slightly. But the bill also would remove language the current law that exempts disabled veterans from the funding fees, as a Phoenix-based Realtor outlined to Military.com.
Under the proposal, 100 percent disabled veterans would remain exempt. All other veterans wouldn’t have to pay fees so long as their loans were under the Freddie Mac conforming loan limit for their region. For most of the nation, that limit is $453,100; higher-cost areas such as large metro centers and Hawaii have significantly higher limits (a full breakdown lives here).
Depending on down payment amounts and other factors, disabled veterans could end up paying thousands in funding fees on loans now exempt from such costs.
The changes would have no effect on loans already in place and wouldn’t apply to new loans until 2019, per the legislation.
A breakdown of proposed funding fee changes, all of which would be in place through 2026:
|Loan/service type||First-time use fee %, now||First-time use fee %, proposed||Subsequent use fee %, now||Subsequent use fee %, now|
|Active-duty, no down payment||2.15%||2.4%||3.3%||3.8%|
|Active-duty, 5% down payment||1.5%||1.75%||1.5%||1.75%|
|Active-duty, 10% down payment||1.25%||1.45%||1.25%||1.45%|
|Guard/Reserve, no down payment||2.4%||2.4%||3.3%||3.8%|
|Guard/Reserve, 5% down payment||1.75%||1.75%||1.75%||1.75%|
|Guard/Reserve, 10% down payment||1.5%||1.45%||1.5%||1.45%|