Attorney fee & processing fees on short sales when buyer is purchasing using a VA loan?

Does anyone know how when the buyer is purchasing a short sale with a VA loan an Attorney fee of 800.00 for obtaining the approval(s) & an Attorney processing fee of 895.00 can be paid by the buyer ? I know it cannot come out of the 3% contribution being made by the seller & I know it cannot be paid by the Veteran . On almost all short sale I have seen lately the seller is requiring the buyer to pay these attorney if the buyer is a purchasing w/a VA loan how is it possible for any VA buyer to be able to purchase & pay these fees?

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Why can the veteran not pay it?  Why can it not come out of the 3%?  It is a closing cost.

I agree..... but the lender(s) I spoke with  say that the  VA says the Veteran cannot pay any fees to a Attorney UNLESS it was for work the Attorney did on the title. So it is considered a non allowable.

OK I would find another lender.  Technically the attorney is doing work for the title, a short sale can be a condition on title that needs to be cleared.

I have spoke w/several lenders & all say it is not their issue with the Veteran paying these fees it is an expense the VA will not allow the Veteran to pay.I hate to see a Veteran lose a home over 1695.00  (they can afford to pay these fees)  But if the VA will not allow them to pay the fees & the seller requires the buyer to pay these fees I am tying to figure out how these fees can be paid so the VA is okay with it . Someone has had to have had this issue before & there has to be a way it can be done.

BTW the fees are 895.00 for the attorney going to court to get the courts approval for the short sale (seller had a BK  so court approval was needed & obtained ) so the attorney is to be paid for doing that work & then 800.00 to the same attorney for processing all the short sale paperwork on the 1st & 2nd lien approvals... so it is spelled out clearly what the fees are for.

Here's the misunderstanding by many.  That as long as there is a seller closing cost credit it can be used for anything.  Wrong.  Closing cost credit is to assist the buyer with their financing cost and/or related cost such as tax reserves. Attorney fees have nothing to do with buyer's financing. The buyer probably doesn't require the full 3% ccc.  Some short sale lenders even require to see the GFE to verify the cost that seller needs covered.  Seller's agent was wrong for making this requirement for buyer.  It was his/her responsibility to know what VA would allow or not allow when he had seller accept the offer. Since they hired the attorney they should pay him.


You are so correct, actually this has become a huge problem with agents just checking off that sellers will accept VA without being full aware of what VA requirements are. It is also a huge problem with this recent adding in the remarks that Buyers MUST pay these attorney fees.Not that I think the attorney doesn't deserve/earn their fees , as I do I believe if they work on getting the short sale approvals then YES they do deserve to be paid. And yes it is a big misunderstanding that the 3% contribution can be used for any amount the buyer needs covered that will fit into the 3%, most do not understand the allowable & the non allowable costs that can be paid by the VA buyer. I have heard that this attorney fees can be Gifted to the VA buyer by a family member or friend..but I do not think that sounds correct either as it would still appear on the HUD as being paid by the buyer ..leading right back to the same issue (cannot be paid by the buyer). I am thinking at this point that only way to make it happen would be for the selling agent to contribute out of their commission for that fee & yes I agree that would be painful on the selling agents commission as well as the selling agent should not have to cover this fee as they already must cover any transaction fee their office charges as the veteran cannot pay that expense either..but seems no other solution at this point.

Thank you Kevin, I think I may have just found my answer in the website you directed me to! I really appreciate your sending me those websites although I searched different websites myself these helped me more than any other I found ! thxs again,


The Sellers lender must pay these extraordinary fees if the buyer is obtaining VA financing.

The Sellers short sale decision lender may not approve those fees however the Sellers agents or even the Seller may be allowed to pay those fees at closing.

The VA buyer/borrower cannot pay these fees and you need to identify an alternative disbursement solution.

Thank you for the response.. I am getting so many conflicting answers from the VA & from lenders & from agents . I hate to see VA buyers lose a home over a 1695.00 fee , that they can afford to pay, are willing to pay but not allowed to pay.



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