The nation's largest lenders are the subject of a federal lawsuit that accuses them of ‘a brazen scheme to defraud both our nation's veterans and the United States Treasury’ out of millions of dollars in residential mortgages guaranteed by the Department of Veterans Affairs (VA).
The Washington Post reports that the lawsuit was filed by two mortgage brokers in the U.S. District Court for the Northern District of Georgia in 2006, but has remained under federal seal for the past five years while it was under investigation. The case centers on refinanced loans for active-duty military personnel and retired veterans who take part in a VA program to lower their interest rates or shorten their mortgage terms. The brokers who filed the lawsuit claim that lenders ordered them not to show attorney's fees to the title examination fee, a violation of VA regulations.
‘This is a massive fraud on the American taxpayers and American veterans,’ says James E. Butler Jr., one of the attorneys representing the brokers, who adds that the improper fee practices impacted up to 90% of the 1.2 million active-duty personnel and retired veterans who refinanced their mortgages.
The companies charged in the lawsuit are Bank of America and its Countrywide mortgage unit, CitiMortgage, First Tennessee Bank, GMAC Mortgage, Irwin Mortgage, J.P. Morgan Chase, Mortgage Investors, New Freedom Mortgage, PNC Bank, Wells Fargo and the now-defunct Washington Mutual Bank.
The U.S. Department of Justice declined to become involved in the prosecution of this case.