The Department of Veterans Affairs still owes $189 million in refunds to 53,000 veterans — because of documentation issues Veterans Affairs left unaddressed since 2014
When the VA Office of the Inspector General conducted a review to see whether or not the Veterans Benefits Administration had systems in place to ensure veterans were being appropriately charged and funded, they found that 3 percent of the $9.78 billion in funding fees VA collected from 2012 to 2017 were inappropriately charged. And, while 3 percent might sound like an insignificant number, it's 72,900 veterans and $286.4 million.
Of that 3 percent, VA has refunded 20,000 veterans approximately $100 million in funding fees. That leaves $189 million and nearly 53,000 veterans still in need of a refund.
These are disabled veterans who should have been exempt from some of the fees associated with VA home loans. The average amount each veteran is owed from VA is $4,483 — but the IG review found that some veterans should be reimbursed as much as $19,470.
The IG report concluded that VA does not have appropriate systems in place to ensure that veterans are being charged and funded correctly. Certificates of Eligibility in the VA system did not reflect the correct exemption status for veterans, and there's no automated process to identify exemption status changes.
VA has been aware of the issue since October 2014. Back then, VA owed roughly 48,000 veterans approximately $151 million. While VA acknowledged the discrepancy, as of January 2019 no refunds have been issued. And more veterans have been affected since.
The IG report provided suggestions for how Loan Guaranty Service should remedy the situation that included identifying exempt veterans who were charged funding fees, developing a system to mitigate the lack of real-time funding fee exemption status updates, planning periodic reviews, and consistently obtaining documentation.
In the meantime, if you believe you might be entitled to a refund from VA for home loan funding fees, VA asks that you visit the VA Home Loans website for more information.