A report by the Military Times reveals that Veteran Affairs officials have paid out more than $400 million in refunds of home loan funding fees following an inspector general’s report.
The inspector general’s report found that tens of thousands of veterans were improperly charged extra fees when applying for the loans. According to the Military Times, VA officials have reviewed more 130,000 cases over the summer seeking errors, which mostly involved clerical mistakes or disability ratings changes after vets settled on their loans.
Existing rules state that veterans and service members must pay a VA funding fee when they apply for a VA home loan, with costs between 0.5% and 3.3% of total lent money. The money is designed to offset administration costs for the department, but disabled veterans are exempt from the fee.
The inspector general report released earlier this year, however, found that at least 53,000 disabled veterans had been charged the fees in recent years. VA officials said in May they would review current and past loans, and contact veterans eligible for refunds.
VA Secretary Robert Wilkie said in a statement that the effort stretched back as far as 20 years ago.
“Our administration prioritized fixing the problems and paid veterans what they were owed,” Wilkie said.
The Military Times says the payout total was “significantly above” the nearly $290 million investigators estimated earlier this year. Refunds ranged from several thousand to more than $20,000.
It was reported earlier this year that the volume of the amount of loans originated through the Department of Veterans Affairs came to 119,048 loans for $31.9 billion during the first three months of 2019. The average VA loan was $268,213.
The Department of Veterans Affairs reported the overall loan volume for Q2 2019 (fiscal-year Q3) jumped to 155,685 loans for $44.1 billion.
In an interview with MReport, Michael Oursler, Chief Credit Officer for NewDay USA, said leading the way for VA loan origination was fintechs, as the technology involved helps with quicker processing and more efficiency.
It allows quicker closing times and a smoother transaction. Not that hitting a contract date for a civilian is not important, it’s just a little bit higher stakes in the military space, so being able to leverage technology to improve service is important.