The U.S. Department of Veterans Affairs has recently confirmed a temporary solution for helping homebuyers using VA loan. The policies will allow house buyers with VA loans to pay them out of pocket, which was prohibited earlier. The change will soon come into effect from August 10th, 2024.
The VA has come up with a temporary fix after the announcement of the settlement in March with the National Association of Realtors (NAR). They have settled a class-action lawsuit that mandates changes to its brokerage fee regulations, potentially altering the real estate market landscape. Ahead of the settlement’s implementation, the VA has announced an adjustment to support Veterans utilizing VA-guaranteed home loans to remain competitive in home buying.
Starting from August 10, 2024, eligible Veterans, active duty service members, and surviving spouses can cover certain buyer-broker fees when purchasing a home using their VA home loan benefits. This update aims to uphold the VA’s commitment to facilitating Veterans’ easier access to homeownership. Once it is approved, the settlement will allow sellers to opt out of paying for buyers’ real estate agents. It will potentially shift the costs onto buyers themselves.
To understand more about this, consult VA mortgage lenders in Florida. At The Doce Group, we are offering VA loans to help eligible Veterans achieve homeownership with unparalleled benefits.
Impact of the Settlement
Till now, the settlement’s impact is not certain as the market is adjusting to it. But, it is expected that the house buyers will be paying their buyer-broker charges. It was a common practice in VA’s program for sellers to pay for the buyer-broker fees of the Veteran.
This change by the VA is a response to the recent lawsuit against the National Association of Realtors. Moreover, it is anticipated to reshape how real estate commissions are handled. Starting from August 17, sellers will not be mandated to provide compensation to buyer agents through multiple listing services. Instead, buyers will need to arrange these payments independently.
Buyers can alternatively request sellers to cover these fees during the closing process. The VA’s interim solution specifies that all buyer-broker fees applied to veterans must align with local market norms and be deemed reasonable. Industry experts have also highlighted the potential benefits of competition, emphasizing the importance of VA buyers familiarizing themselves with the revised commission framework to secure favorable terms with their agents.
Key Changes To Be Noticed By Veteran Homebuyers
The settlement allows VA borrowers to cover these costs, ensuring they are not forced to choose between obtaining a VA loan and working with a real estate agent. It is crucial to understand that these fees cannot be financed within the VA loan itself, necessitating alternative payment methods.
VA loans are particularly popular among active military members, veterans, and eligible surviving spouses because they eliminate the need for down payments and private mortgage insurance (PMI). Borrowers also typically benefit from lower mortgage rates compared to other loan options.
Joshua Jacobs, VA Under Secretary for Benefits, emphasized the commitment to supporting veterans & their families in achieving homeownership goals: “Veterans with VA home loan benefits can now responsibly cover reasonable and customary charges. This includes commissions and other broker-related fees, ensuring their competitiveness in today’s dynamic housing market.” To know more about VA loans near me, you can consult our VA Mortgage Florida team.
Importantly, the recent settlement does not prohibit Veteran homebuyers from requesting sellers to cover these fees at closing, a longstanding and permissible practice under VA guidelines. Furthermore, all buyer-broker fees charged to Veterans must align with local market norms and be reasonable. As the real estate market evolves, the VA will watchfully monitor for frequent changes in realtor commission structures that could potentially reduce costs, enhance competition, and broaden pathways to homeownership.
Hopefully, the temporary measures will make sure that the Veterans are not negatively affected by the class-action settlement. VA will take responsibility for monitoring how the settlement will affect the brokerage market. Moreover, it is looking forward to achieving rulemaking.
Can Veterans Negotiate These Fees?
The VA is encouraging Veterans to negotiate buyer-broker fees with their real estate agents. Also, it is retaining the option to request sellers to cover these fees at closing. All buyer-broker charges for Veterans utilizing the home loan benefit must adhere to local market standards of reasonableness. Alongside other protections, this ensures fairness and transparency during the transaction process.
You can understand more about the negotiation by getting in touch with our Veterans Mortgage Florida service. The VA remains committed to monitoring and addressing changes in commission structures that could enhance affordability, competition, and accessibility to homeownership opportunities for Veterans in the local market.
When do the limitations of a VA loan apply?
VA loan limits are relevant when there is a remaining entitlement, indicating that a portion of the VA-guaranteed funding available to you has already been utilized. According to the VA, an individual might fall into this group if:
- They have an active VA loan.
- They had a short sale and didn’t repay the loan completely.
The loan limitation for VA borrowers with remaining entitlement varies based on the county of residence. In the borrower default event, the VA guarantees the lender up to 25% of the county limit minus any entitlement already utilized by the borrower.
Final Thoughts
Hope you are now aware of the new policies regarding the New VA Loan policies. If you are looking for a trusted VA loan provider, consult our The Doce Group team.