VA Home Loan Refunds

Veterans received $400 million in refunds after the White House tackled the VA Home Loan debacle that was a known problem within the agency for twenty years.

In 2014, a VA official drafted an internal memo informing the Department of Veterans Affairs leadership that the agency was wrongly withholding funding fees from disabled veterans for years.

At the time, agency officials decided the wrongful withholding of $400 million was not important enough to warrant immediate action.

That memo leaked.

Enter AJ Lagoe and KARE 11 News here in Minneapolis.

In May, Lagoe and KARE 11 exposed the scandal locally that impacted veterans across the nation. Some disabled veterans whose disability rating was issued during the pendency of loan processing for a VA Home Loan were improperly not refunded the funding fee.

130k Disabled Veterans Impacted

The error may have impacted 130,000 disabled veterans.

The agency’s press release confirms “[t]he refunds are the columniation of a multi-year internal review of millions of VA-backed home loans spanning almost two decades.”

But the agency did not come out with its dirty little secret until after Lagoe exposed the wrongful withholding scheme.

Once exposed, agency leadership promised immediate action over the summer. VA says it fixed the problem in five months, which is practically overnight for a big bureaucracy like VA.

VA Home Loan Refunds Comments

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

Specifically:

The VA’s Loan Guaranty Service (LGY) program identified more than 130,000 loans where a refund was potentially due. While some funding fees charged were found to be attributable to clerical errors, most fees were charged correctly. The exception was for those Veterans whose exemption status changed following the issuance of a disability rating after the closing of their loan. Letters were mailed notifying Veterans who were eligible for a refund.

Press Release Downplayed

What struck me about the agency press release was how the agency downplayed how quickly VA addressed the problem that was brushed under the rug by the agency under President Obama. I expected more boasting, frankly.

The reality here was that VA did not think ripping veterans off of a few thousand dollars when buying a house was a big enough deal to stop and fix. That went on since at least 2014 when the memo was first circulated to leadership and was then ignored.

Why not blast trumpets after making such a quick turnaround when fixing the problem?

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14 Comments

  1. So, “VA staff worked diligently throughout the summer reviewing 130,000 cases, which is an average of 16,000 loans reviewed per week,” said VA Secretary Robert Wilkie. “This effort included loans dating back nearly 20 years. Our administration prioritized fixing the problems and paid Veterans what they were owed.”
    Did VA remember to refund interest? And if they did was it apportioned properly per individual mortgage?

  2. That’s ONE good thing happening FOR veterans.
    NOW, if Wilkie would only have HIS employees reimburse the monies to veterans AND pay off existing hospital bills – that HIS employees failed to do for a long time – that would also be a good thing.
    I’m still waiting on the remainder of my monies, Wilkie! I’m still owed about $2,900.00 that was promised to me “in writing!”

  3. What about processing these hundreds of VA disability claims on appeals and remands?? This seems more urgent then anything!! Please address this issue asap!!

  4. Remember, a high number of the employees in VA are Veterans themselves. It’s not for lack of empathy, something else is going on.
    When you cut an organization down to the bone, it gets lean and MEAN. Somewhere some official set some quotas and it’s wrong, since the loans (and benefits) are an entitlement.

    • VA POLICY IS WRONG, THE PRIORITY MUST GO TO THE COMBAT VETERAN then and only then will u see the psychology of the
      VA change, management has nothing to do with it.

  5. I am 40% service connected and I did a refi in Nov of 18 and just did another last week to get our credit card bills paid off. I used the VA loan program in August of 15 to buy the home. I have had to pay fee’s in each case, in the one we just did I had to pay over $6,000.00. I was told in the beginning stages that I would not have these funding fees but as the process went forward I ended up having to pay them anyway. Is there any way to retrieve these funds from these 3 loans? I used Ditech in all three cases.

  6. Amazing….Hope va is not expecting any fanfare over this. They’re just catching up on doing their job, nothing special. Now, as previously mentioned, all the monies owed for hospital bills, still go unpaid. All the va claims, going denied and declined for years for many. Shut it down, shut it down! Put it in private sector so that they may be sued for monies owed, and their unpaid debts to veterans settled as promised. To take care of the people who dedicated their lives to this country, as it is long overdue.

    • VA is just tipping the iceberg of the job that they should have already been done yesterday. What I mean by the tip of the iceberg is the home loan refunds are among many plaguing issues which need to be straightened out. I heard someone make a statement about low employee numbers to do the massive jobs. Well, I can say you are correct. This goes back to the Obama Administration. I know of many decent VA providers who either retired from the VA, left the VA, and some who have been counting their days until they can retire. All of this massive turnover started during the Obama Administration. Lastly, I can most definitely understand why. The culture of the VA has greatly changed as compared to years ago.
      Thus, I will say to Mr. Wilkie and VA administration, “Thanks for honoring money owed to veterans.” “Job well done.” “Thanks for resolving this issue.” Best.

      • This is good for vets. I am glad for all. VA Home Loan Refunds do not affect me. I have never been involved with the purchasing of a home. And, I do not plan too either. There is too much involved in owning a home. I have too many tasks involved elsewhere. But, finally, the vets are receiving what is due them. 👍🇺🇸🗽

  7. I’m 80% disabled vet and am co-owner of a home we bought in 2017 and just refinanced this week. My husband (who is a Vietnam Vet) is on the loan papers first and I’m second (MSgt, Ret). Are we going to get any funding fees back? My husband is not disabled but I’m rated at 80%

    Thank you.

    Rex Miller, MSgt, USAF (Ret)

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