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We have a customer who did not share with the loan officer that he had a previous VA loan that was not disclosed before the loan closing. The VA funding fee that was disclosed on the borrower’s GFE was short by $4,500, as the fee goes up for each VA loan that is made. Is that a valid changed circumstance? – IBA Compliance Connection

IBA Compliance Connection

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We have a customer who did not share with the loan officer that he had a previous VA loan that was not disclosed before the loan closing. The VA funding fee that was disclosed on the borrower’s GFE was short by $4,500, as the fee goes up for each VA loan that is made. Is that a valid changed circumstance?

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We believe that the borrower’s failure to disclose the first Veterans Administration (VA) loan would constitute a valid changed circumstance, and as a result the RESPA rules permit you to provide the borrower with a revised good faith estimate (GFE) reflecting the resulting increase in the VA funding fee.

The RESPA regulations define “changed circumstance” to include “information particular to the borrower or transaction that was relied on in providing the GFE that . . . is found to be inaccurate after the GFE has been provided.” 12 CFR 1024.2(b). If such a changed circumstance leads to “increased costs for any settlement services . . . the loan originator may provide a revised GFE to the borrower.” 12 CFR 1024.7(f)(1).

In this case, the borrower provided information that you found to be inaccurate, as the borrower originally disclosed that the loan would be the borrower’s first VA loan, and it turned out to be the borrower’s second VA loan. (As the current VA Funding Fee Chart shows, the funding fee can double for any subsequent uses after the first time use of the program, depending on the size of the borrower’s downpayment.)