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VA issues more than $400 million in loan-fee refunds


The U.S. Department of Veterans Affairs (VA) announced that it has returned more than $400 million of erroneously charged mortgage fees to borrowers as part of an “aggressive initiative.”

Military personnel holding houseThe refunds, according to a statement from the VA, came after an internal review of “millions of VA-backed home loans spanning almost two decades.”

Typically, veterans receiving VA-backed mortgages must pay a funding fee, which reduces the cost of the loan to taxpayers, since VA loans have no monthly mortgage-insurance premiums and require no downpayment. Disabled veterans are exempt from paying the fee, but an inspector general’s report released earlier this year uncovered that at least 53,000 disabled vets had been mistakenly charged.

“VA staff worked diligently throughout the summer reviewing 130,000 cases, which is an average of 16,000 loans reviewed per week,” VA Secretary Robert Wilkie said. “This effort included loans dating back nearly 20 years. Our administration prioritized fixing the problems and paid veterans what they were owed.”

The mistakenly charged fees were due either to clerical errors or to veterans whose exemption status changed when a disability rating was issued after their loan closed. Refunds ranged from “a few thousand dollars to more than $20,000 for some individuals,” according to the Military Times. The publication also reported that the refunded amount was “significantly above the nearly $290 million total investigators estimated earlier this year.”

The VA mailed letters to notify veterans who are eligible for a refund. Additionally, the VA announced several internal changes to ensure that both borrowers and lenders are provided with up-to-date information regarding funding-fee exemption statuses. These changes include policy guidance that directs lenders to inquire about disability claims during the underwriting process, as well as regular internal oversight to properly identify veterans who are eligible for fee waivers and refunds.

 

 

 

 

 


 

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