From Jan. 1, 2012 to Dec. 31, 2017, Veterans Affairs incorrectly charged disabled veterans funding fees on their VA-backed loans that veterans were not required to pay because of their disability status. This was confirmed by a report released in June 2019 by the VA Office of Inspector General.
According to the VA, they will issue more than $100 million in refunds to borrowers who were incorrectly charged. Disabled vets who mistakenly paid a VA Loan funding fee for their VA-backed home loans will soon receive letters notifying them of the refunds.
Refunds For Disabled Vets Are Coming, But Check Your Records To Be Sure
According to the Inspector General report, 53,200 veterans may be owed a total of $189 million.
Of that $189 million, roughly $67 million was mistakenly charged to veterans who were exempt by their “pending” disability status at the time of their loan applications. The remaining $122 million was considered “unavoidable” due to a veterans’ disability status being changed after they received VA home loans.
If you are a vet with disability status, note that the refund amount can be significant, considering the average funding fee was $4,483, with the highest fee topping in at a whopping $19,470.
Veterans can check if you’re affected by looking at your VA Loan closing documents for the charge, identified as a Funding Fee. Here’s an example:
Legislation Is Likely Coming, But Veterans Affairs Is Trying To Get Ahead Of This
While there is a movement by some lawmakers to introduce legislation that would help prevent these kinds of issues in the future, the VA has proactively moved to resolve this particular issue instead of waiting on legislation. The VA has informed borrowers about the fee structure and waiver eligibility for VA-backed loans and has sent letters to affected veterans.
In May 2019, the VA changed its disability compensation awards letters to include information about the Funding Fee-waiver benefit, and the welcome letter that veterans receive when applying for a VA loan will also include this information.
Note that for non-disabled veterans, the Funding fees are expected to rise after Jan. 1, 2020, in order to help fund disability compensation for veterans.
Here’s a related news story from TV station WHAS11.