VA Improperly Charged Disabled Veterans $286 Million in Home Loan Fees

Disabled veterans may have been improperly charged $286 million in home loan fees that they were meant to be exempt from, according to the Office of the Inspector General (OIG) of the Veterans’ Administration (VA). These fees affected an estimated 53,000 disabled veterans between 2012 and 2017, according to the report, and although the issue was originally discovered in 2014, no action was initially taken to stop it.


Under the VA’s Home Loan Guarantee Program, qualifying veterans are entitled to access home loans (issued by private lenders, such as banks) that are partially guaranteed by the VA. This guarantee usually comes with a “funding fee” of somewhere between 0.5% and 3.3% of the loan’s value, but veterans with service-related disabilities are supposed to be exempt from this funding fee. However, an investigation by the OIG revealed that disabled veterans were being charged these funding fees anyway, resulting in an average cost of $4,483 per affected individual. Although much of this has been refunded, there is still about $150 million in refunds that have yet to be issued.

While this is a problem all on its own, these improper fees are a part of a larger issue the VA has had with its accounting practices, and with making sure veterans are aware of their benefits. According to Kristen Rouse, founding director of the NYC Veterans Alliance, speaking to Justin Rorlich at Quartz, most disabled veterans are unaware that they were exempt from these fees, and Rouse herself was unaware of this exemption until she read the OIG report. According to data Rouse acquired from the VA, only about 6% of eligible veterans are taking advantage of the VA home loan benefit.

If you are a disabled veteran who has any questions about veterans’ disability benefits, please contact Sullivan & Kehoe, LLP. The attorneys of Sullivan & Kehoe place a special focus on veteran disability law. With over 50 years of combined experience between its lawyers, our attorneys may be able to assist you or a loved one in obtaining VA disability benefits. Call our office at (800) 395 -7830 to schedule a consultation in our New York City, Garden City, Kings Park, Riverhead, or White Plains office.

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