VA unallowable attorney fee - who pays?

If I correctly understand VA circular 26-10-01, the veteran may not be charged for the "attorney's fees associated with settlement", which are not to be confused with charges for title exam.

Since attorneys do charge for performing settlement services, how are other lending institutions handling this? Are lenders covering attorney fee out of pocket as a cost of doing VA loans? Premium pricing to provide lender credit (which seems to be indirectly charging anyway)? Accept lump billing only?

Thanks for any feedback.

If it is a purchase and the seller is paying some closing costs, we make sure to note on the HUD that the seller paid the attorney fee. If it's a refinance or a purchase where the seller is paying no closing costs, we pay the fee and make it up in pricing, normally. I have heard of other lenders having the attorney call the fee something else so they can charge it to the veteran. We don't do this since we call it a closing fee for every other type of loan. It would be deceitful, in my opinion, to treat a VA loan differently.

Thanks RolTyde.

When managing through pricing, how do you handle on the GFE? Do you include or exclude attorney fee in the total of Block 4? Indicate credit in Block 2?

We include the fee since it's customary for the borrower to pay it. There has been some recent discussion about if this is the correct way to handle on VA since it's not customary on VA loans. So far we haven't had questions about it so we will continue showing the fee until we have reputable feedback that it is incorrect.

This is helpful.
Thank you very much.

This thread is a little old, but on the topic of VA unallowables:

The circular states: "The lender may charge the veteran a flat fee up to one percent of the loan amount."

Does anyone know if VA means lender in a very specific sense? In other words, if there is a broker/tablefunder involved could they charge a one percent? Or is only the "lender" allowed to charge that 1%? It comes up sometimes when we have a consumer paid (aka borrower paid) transaction.

That is referring to the Origination Fee. JMHO, as I know in past that is what VA was referring.