Tester, Boozman Introduce Legislation to Ensure VA Repays Veterans Wrongly Charged for Home Loan Funding Fees

WASHINGTON – U.S. Senators Jon Tester (D-Mont.) and John Boozman (R-Ark.) today introduced legislation to ensure veterans who were incorrectly charged fees for their Department of Veterans Affairs (VA) home loan are reimbursed.

Congress exempted veterans who receive VA disability compensation from paying a funding fee to defray the cost of administering a VA home loan. Despite this exemption, the VA Office of Inspector General (OIG) found that the VA charged more than 70,000 disabled veterans more than $286 million between 2012 and 2017. The OIG investigation discovered that since 2014 the Veterans Benefits Administration has known that thousands of veterans may have been improperly charged the funding fees. The VA has yet to repay $189 million to more than 53,000 veterans.

“Ensuring our veterans aren’t unfairly burdened while accessing home loans isn’t a partisan issue- so when the VA doesn’t hold up its end of the deal, we need to do something about it,” said Tester, Ranking Member of the Senate Veterans’ Affairs Committee. “Our bipartisan bill holds the VA accountable to prevent these mistakes from happening again, and ensures that disabled veterans in Montana and across the country are not financially burdened because of VA bookkeeping errors. Anything less is unacceptable.”

“Veterans rely on the VA to properly administer benefits they earned in service to our country. The department’s failure to uphold this responsibility has unduly burdened disabled veterans. This bill ends the VA’s practice of unlawfully charging veterans who qualify for funding fee waivers. Ensuring the VA implements a process to reimburse veterans who weren’t required to pay in the first place and prevent veterans from unfair penalties in the future must be a priority,” Boozman said.

The bill requires the VA to:

• Report to Congress a plan to identify all exempt veterans who were charged funding fees and a timeline for refunding all fees.
• Develop an automated process for generating a refund of inappropriately or unavoidably collected funding fees. The VA is restricted from requiring a veteran, who has had such fees collected, to request a refund.
• Develop a plan within 90 days for processing refunds by VA staff or award a contract to process refunds for erroneously collected fees.
• Report annually to Congress: 1) the number of loan funding fee refunds applied to home loan balances; and 2) the number of such cases for which the VA has received documentation confirming that the refund has been applied to the balance of the loan.
• Develop a technology and process solution to enable real-time updates to funding fee exemption status and within 180 days report on the solution to Congress.
• Authorize the Secretary to refund collected fees directly to the veteran.
• Develop a plan to annually audit VA loans to determine the rate of erroneously charged fees. Findings of the audit will be reported to Congress annually within 60 days of completion of the audit.

On June 24, Tester and Boozman sent a bicameral letter to VA Secretary Robert Wilkie about their concerns regarding the funding fees owed to veterans.