VA owes $190 million to disabled veterans improperly charged home loan fees

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The Department of Veterans Affairs owes about $189 million to 53,000 disabled veterans who were charged home loan fees they were exempt from having to pay, an investigation has found.

These veterans were charged the fees under the VA’s Home Loan Guaranty Program and now may be entitled to refunds ranging from $5,000 to $20,000, a VA Inspector General audit released Thursday found.

VA loan managers knew disabled vets were being charged the fees improperly since 2014 but never did anything about it, VA IG auditors determined.

“OIG finds it troubling that senior (Veterans Benefits Administration) management was aware that thousands of veterans were potentially owed more than $150 million yet did not take adequate actions to ensure refunds were issued,” the IG report says.

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The loan managers told the IG they were focused on other priorities, including processing high volumes of applications, USA Today reported.

The report faulted the Veterans Benefits Administration for placing the burden on a disabled vet to submit a claim for a refund.

The VA announced last month that it was notifying veterans when they buy homes through the Home Loan program that they are exempt from the fees if they are disabled or later determined to be disabled, the paper reported.

“Through an internal quality improvement effort, VA has put a plan in place to better inform veterans through key communications when the law allows VA to waive the fee for a veteran,” the announcement quoted VA Secretary Robert Wilkie as saying.

The Veterans Benefits Administration told the IG that it would identify exempt veterans who paid the fees and issue them refunds and that the financial impact to the veterans was minimal over the life of the loan, The Washington Post reported.

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Auditors looked at the period 2012 to 2017.

They determined nearly $300 million in home loan origination fees had been collected from 73,000 exempt disabled vets during that time.

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The auditors found that nearly 20,000 of these veterans submitted claims for refunds and were reimbursed nearly $100 million.