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CHLA asks Congress not to extend higher VA home loan fees

The Blue Water Navy fees have been in place since 2019 and are slated to expire in April

The increased fees that military veterans and active duty personnel pay for Veterans Administration (VA) mortgage loans should be allowed to expire on schedule, and congressional leaders should avoid any policies that would extend these fees, according the Community Home Lenders of America (CHLA).

CHLA leadership spelled out their opposition to the increased VA home loan fees on Thursday in a letter sent to congressional chairs and ranking members of the House and Senate Veterans Affairs Committees.

“We are writing now – both to oppose any effort to extend [the fee hikes] during the lame duck (as Congress often looks for fees of this type as offsets) – but also to ask Congress to plan ahead to avoid extending the fees next April,” the letter states. “CHLA thanks you for your work in helping veterans nationwide. It is a challenging task, with an estimated 19 million US veterans entitled to and in need of various VA benefits. CHLA strongly supports maintaining this commitment to fully helping those who serve our country.”

The increased fees — known as “Blue Water Navy fees” — have been in place since 2019 and are used to pay for non-mortgage VA benefits, according to CHLA. The fees are currently set to expire next April, barring an extension from Congress.

“CHLA’s position for all federal housing programs is that insurance premiums should be established solely for the purpose of maintaining the health and financial integrity of the underlying mortgage program and should never be diverted for other purposes, however laudatory,” the CHLA said in its letter. “In the case of Veterans Administration program, the guarantee fees are set well above what is needed for a true actuarial basis.”

With the current fees, a veteran using the VA program to buy their first home must pay a 2.30% “insurance fee,” and any subsequent home that is purchased comes with a 3.60% “insurance fee.” CHLA considers these fees as being unnecessarily high.

“As a result, VA home mortgage fees do not actuarially reflect the risk of this low-default program, one of the safest government-backed mortgages in the land,” the CHLA said. “Thus, we respectfully ask— on behalf of the veterans and active-duty families we serve — that Congress take no action to continue these high VA mortgage fees. Allowing them to expire will save veterans and active-duty personnel nationwide some $200 million annually.”

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