RESPA for veterans: referral fees around VA lenders, escrow and servicing transfers

RESPA governs the VA closing and the servicing that follows; for veterans the live issues are referral money flowing through “military relocation” networks, the escrow account VA lenders require, and the notices owed when a VA loan is sold.

A VA-guaranteed loan is a federally related mortgage loan, so Regulation X applies in full. The guaranty adds no exemption; it adds a second layer of fee rules from VA that sits on top of RESPA’s.

Section 8 and the military referral ecosystem

Base housing offices, relocation “concierge” services, veteran-branded real estate networks and rewards programs all route buyers to preferred VA lenders. RESPA Section 8 forbids any fee, rebate or thing of value exchanged for the referral of settlement business. A cash-back rewards program paid by a brokerage to a buyer is generally permitted; money flowing from the lender to the network for sending veterans is not, unless it pays for actual marketing services at fair value. Ask the person who recommended the lender whether they are paid by that lender, and request the Affiliated Business Arrangement disclosure if the lender, title company or agent share ownership — you may not be required to use an affiliate except for the lender’s own appraisal and credit report.

Two fee rulebooks at one closing

VA limits what a veteran may pay: a lender may charge a flat fee of up to 1% of the loan amount or itemized reasonable charges, but not the 1% on top of items such as processing, underwriting or document preparation. Fees VA labels non-allowable — the lender’s attorney, escrow or settlement fees, notary, document preparation — must be paid by the seller, the lender or absorbed inside the flat fee. RESPA’s good-faith estimate rules police the numbers; VA’s list polices who pays them. Since August 2024, VA has also allowed a veteran to pay a buyer-broker commission where the seller will not; confirm the current policy with your lender, as it was issued as a temporary measure.

Escrow accounts on VA loans

VA lenders almost always require an escrow for property taxes and homeowners insurance. Under Reg X the servicer may hold a cushion of up to one-sixth of annual disbursements, must run an analysis every year and must refund any surplus over $50. Disabled veterans whose state property-tax exemption takes effect after closing should send the approval letter to the servicer and request a new analysis — otherwise the escrow keeps collecting for a bill that no longer exists.

When the loan is sold or the servicer changes

VA loans are routinely pooled into Ginnie Mae securities and servicing moves. Reg X requires the old servicer to notify you at least 15 days before the transfer and the new servicer within 15 days after, with a 60-day grace period during which a payment sent to the wrong servicer cannot be treated as late. That grace period is the one to invoke when an allotment keeps flowing to a servicer that no longer holds the loan.

Counseling list and information requests

Within three business days of your application the lender must give you a list of HUD-approved housing counseling agencies; some specialize in veterans. After closing, Reg X gives you the notice of error and request for information tools — written, to the servicer’s designated address — with acknowledgment in five business days and a substantive answer within 30 business days. Read the general framework on the RESPA page and the fee list in our closing costs guide.

What to check

• Ask every referral source — relocation service, veteran network, agent — whether the lender pays them, and get the affiliated business disclosure in writing.
• Check whether the lender charges the 1% flat fee or itemized charges; VA does not allow both, and non-allowable fees cannot land on you.
• Send a new disabled-veteran property-tax exemption to the servicer and request an escrow re-analysis.
• Keep the 15-day servicing transfer notices and use the 60-day grace period if a payment goes to the old servicer.
• Use a written notice of error or request for information at the servicer’s designated address, not a phone call.

Frequently asked questions

Can my real estate agent be paid for sending me to a VA lender?

Not for the referral itself. RESPA Section 8 prohibits paying or receiving anything of value for referring settlement business, including to VA lenders. Payment for genuine marketing services at market value is permitted, and rewards paid by a brokerage to the buyer are generally allowed. If an agent insists on one lender, ask why and compare a second Loan Estimate.

Does VA require an escrow account for taxes and insurance?

VA lenders generally require one on VA-guaranteed loans, and Reg X then governs how it runs: a cushion of at most one-sixth of annual charges, an annual analysis and a refund of surpluses above $50. If a disability-related property-tax exemption lowers your bill, request a new analysis so the monthly payment drops.

The rule in full: Real Estate Settlement Procedures Act (RESPA) and Regulation X. The borrower profile: Veterans and service members. Related guides: Conventional vs FHA vs VA vs USDA: the four loan types compared · Closing costs explained: what is negotiable, what is not · Closing costs explained: what is negotiable, what is not · Earnest money explained: how much, who holds it, and how you lose it.

Other federal rules for veterans and service members

TILA / Reg Z · TRID disclosures · ECOA · Fair Housing Act · HMDA · SAFE Act / NMLS · ATR / QM · HOEPA · HPA / PMI · Servicing rules · FCRA · Flood insurance · MARS rule · SCRA · LO compensation

RESPA for other borrowers

First-time buyers · Conventional borrowers · Self-employed · Investors · Retirees · Bad credit · Foreign nationals · Physicians · Heroes · Rural buyers · Condo & second home · Refinancing