VA Loan Funding Fee – Are you Exempt from paying it?

Do you know what your VA status is with regard to VA recognized, service-related medical issues?

If you are a veteran who either receives or is eligible to receive VA compensation for service-connected disabilities you are entitled to a waiver of the VA loan funding fee, or a refund where applicable.

Some borrowers are eligible for this waiver when they go to apply for the VA mortgage loan or refinance loan, but others become eligible for it later once the VA has officially recognized the service member’s disability rating.

One important factor in the VA loan funding fee waiver process was addressed by 2012 legislation known as the Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012.

This act states that in regard to the VA loan funding fee waiver, “A veteran described in subparagraph (B) shall be treated as receiving compensation for purposes of this subsection as of the date of the rating described in such subparagraph without regard to whether an effective date of the award of compensation is established as of that date.”

‘‘(B) A veteran described in this subparagraph is a veteran who is rated eligible to receive compensation—
           
‘‘(i) as the result of a pre-discharge disability examination and rating; or
           
‘‘(ii) based on a pre-discharge review of existing medical evidence (including service medical

It is not always possible to assess a veteran’s condition fully during the pre-discharge examination phase of the claim.

If further exploration of a veteran’s claim is needed, could a borrower be required to pay the VA loan funding fee in the interim until such time as the claim is officially recognized by the VA as a service-related condition? It is possible and has happened.

In such cases, the borrower would need to apply for a refund after his or her VA loan funding fee exempt status is certified--refunds are NOT automatic.

How long could it take in such cases to get that certification based on the decision on a compensation claim? According to the VA official site, “The length of time it takes to receive a decision depends on several factors, such as the complexity of your disability(ies), the number of disabilities you claim, and the availability of evidence needed to decide your claim.”

According to VA sources, most claims can be processed within six months, but complicated claims will take longer.

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