Lawsuit Accuses Banks of Cheating Veterans

October 6, 2011

A federal lawsuit filed in 2006, but unsealed until this week, accuses 13 large banks and mortgage companies of overcharging military veterans who were applying for home loans guaranteed by the Department of Veterans Affairs. 

Federal law does not allow lenders to charge attorney fees and settlement closing costs with certain home loans for military vets. They’re only allowed to charge “reasonable and customary” fees. But the lawsuit claims military veterans were charged attorney fees on thousands of loans, and banks covered up the charges by labeling them as “title examination” or “title search” fees. 

Banks named in the lawsuit include lending giants such as Wells Fargo, JPMorgan Chase & Co., and Bank of America. The banks have denied any wrongdoing in court documents, Associated Press reports. 

About 90 percent of more than 1.2 million refinance loans that have been made to veterans and their families in the past decade have been found to have alleged fraud, the Associated Press reports in an interview with the plaintiff’s attorney. 

"This is a massive fraud on the American taxpayers and American veterans," James E. Butler Jr., one of the attorneys who brought the case, told the Associated Press.

Source: “Federal Lawsuit Claims Banks, Mortgage Companies Cheated Veterans by Hiding Illegal Fees,” Associated Press (Oct. 4, 2011)