House Subcommittee Chairs Levin and Pappas Lead Bipartisan Request for VA Plan to Repay $286 Million in Home Loan Fees Erroneously Charged to Exempted Veterans

June 25, 2019
Press Release

Washington, D.C. – Today, U.S. Representative Mike Levin (D-CA), Chair of the House Veterans’ Affairs Subcommittee on Economic Opportunity, and Representative Chris Pappas (D-NH), Chair of the Subcommittee on Oversight and Investigations, led a bipartisan letter to VA Secretary Robert Wilkie requesting information on the Department’s plans to repay $286.4 million in home loan fees that were erroneously charged to thousands of exempted veterans as part of the VA Home Loan Program. The letter was also signed by House Committee on Veterans’ Affairs Chairman Mark Takano (D-CA), Senate Committee on Veterans’ Affairs Ranking Member Jon Tester (D-MT), and others.

The Department’s Office of Inspector General (OIG) released a report, Veterans Benefits Administration: Exempt Veterans Charged VA Home Loan Funding Fees, detailing that $286.4 million in home loan fees were wrongly charged to roughly 72,900 veterans who are entitled to VA disability compensation and therefore exempt from paying the fees.

“It is totally unacceptable that tens of thousands of our nation’s heroes were charged enormous sums of money that they didn’t owe because of negligence at the VA,” said Representative Levin, Chair of the Subcommittee on Economic Opportunity. “The men and women who have served our country deserve better, and the VA must correct this situation immediately.”

“It is extremely alarming that the VA did not have adequate safeguards in place to ensure our veterans receive their earned benefits, leading to more than $280 million in improper payments,” said Congressman Pappas, Chair of the Subcommittee on Oversight and Investigations. “We look forward to hearing from the VA on how they plan to remedy this immediately so veterans do not continue to face undue financial burdens.“

“It is unsettling to hear that VA mistakenly charged veterans millions of dollars in home loan fees they didn’t actually owe,” said House Committee on Veterans’ Affairs Chairman Takano. “I call on VA to rectify the situation as soon as possible- our veterans deserve so much better.”

“Ensuring our veterans can access the home loans we’ve promised them isn’t a partisan issue,” said Senator Tester, Ranking Member of the Senate Veterans’ Affairs Committee. “So I’ll be working across the aisle to hold the VA accountable on behalf of disabled veterans who were wrongly charged to prevent this from happening in the future, and to ensure that veterans in Montana and across the country get the proper compensation they earned. Anything less is unacceptable.”

The letter was also signed by House Committee on Veterans’ Affairs Vice Chair Conor Lamb (D-PA), Subcommittee on Health Chair Julia Brownley (D-CA), Subcommittee on Technology Modernization Chair Susie Lee (D-NV), Representative Gregorio Kilili Camacho Sablan (D-MP), Representative Colin Allred (D-TX), Senator Marsha Blackburn (R-TN), Senator Richard Blumenthal (D-CT), and Senator Jerry Moran (R-KS).

Click here or see below for the full letter to Secretary Wilkie:

Dear Mr. Secretary:

We are writing to raise our significant concerns regarding hundreds of millions of dollars in funding fees owed to our nation’s veterans by the Department of Veterans Affairs (VA).

On June 6, the Department’s Office of Inspector General (OIG) released a report, Veterans Benefits Administration: Exempt Veterans Charged VA Home Loan Funding Fees, detailing that VA owes $286.4 million in home loan funding fee refunds to thousands of veterans participating in the VA Home Loan Guaranty Program. As part of the loan guaranty program, many veterans are exempt from paying the funding fees if they are entitled to VA disability compensation. For the estimated 72,900 veterans affected, the amounts owed by VA averaged $4,483, with some veterans owed as much as $19,470. Of course, this is a large amount of money for the individual veterans.

The OIG established that the Veterans Benefits Administration’s (VBA) Loan Guaranty Service management, “was aware since October 2014 that thousands of exempt veterans may have been charged home loan funding fees,” which the OIG noted as “troubling.” The OIG also found “disturbing” that as of January of this year, the Department had not acted to issue refunds for the erroneously collected funding fees. We share the OIG’s concerns.

While we recognize that VA has largely agreed to implement the OIG recommendations, it is unclear when veterans will see their reimbursement. The Under Secretary for Benefits agreed to implement a plan for identifying and returning the funding fees to veterans by July 31 of this year. The Under Secretary also promised to establish improved control measures, in order to prevent charging fees to exempt veterans in the future. 

We therefore ask that you provide our Committees with a detailed schedule for the funding fee repayments as well as a plan to implement the necessary financial controls to mitigate this from happening again in the future. We would also like to see the Department’s plan for comprehensive improvements to documentation of home loan guarantees. We request a briefing to the Committees’ staff regarding the plan of action to schedule the repayments and all other issues the Department is taking in response to the OIG’s report by June 28, 2019.

Thank you in advance for your attention to our request.