Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

Full Bio →

Written by

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

Full Bio →

Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Mar 13, 2012

Advertiser Disclosure

Advertiser Disclosure: We strive to help you make confident loan decisions. Comparison shopping should be easy. We are not affiliated with any one loan provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about loans. Our goal is to be an objective, third-party resource for everything loan related. We update our site regularly, and all content is reviewed by experts.

JPMorgan Chase Bank finalized a settlement with the federal government to pay $45 million to end a lawsuit over the bank cheating military veterans and taxpayers out of millions of dollars.

The bank illegally hid the fees in the veteran’s home mortgage refinancing loans, which would cause their guarantees to void. The bank, however, hid that fact and continued to collect compensation for the guarantees from the government.

JPMorgan Chase is but the first bank of many to be pursued for this illegal VA loan activity. There are still cases pending against Wells Fargo Bank, Bank of America, CitiMortgage, Suntrust Mortgage, Washington Butuat Bank, PNC Bank, Countrywide Home Loans, Mortgage Investors Corp., and First Tennessee Bank.

“Our lawsuit alleged that these lenders committed blatant fraud,” said co-lead counsel Marlan Wilbranks in a statement. “Although JPMorgan Chase has paid to settle its claims, we are looking forward to moving the case against the other defendant lenders. These banks should be held accountable for causing the government to pay millions of dollars on void loan guarantees.”

The Details of the Crime

The Department of Veterans Affairs (VA) offers our current and former service members special financing opportunities when it comes to purchasing a home. VA loans are offered at reduced interest rates and lower down payment requirements in an effort to more easily help our veterans find a home.

JPMorgan Chase Bank and the other defendants have been accused of charging veterans an additional $300 to $1,000 per VA loan administered. In the last ten years, there have been more than 1.2 million VA loans originated and some justice officials believe up to 90 percent of them may have been affected by this fraudulent activity.

“The banks collected the illegal fees from veterans, and they obtained hundreds of millions of dollars in loan guarantees they otherwise wouldn’t have received,” explained Mary Louise Cohen, an attorney from Washington, DC, in a statement.

But it wasn’t just veterans who were preyed upon—they stole from every taxpayer in the nation. The banks approached the government for reimbursement on the VA loans despite the fact that their hidden fees in the loans would have nullified the guarantees.

Some of the money each individual pays the government come tax season was being diverted into these fraudulent banks’ coffers.

Whistleblowers: America’s New Financial Heroes

This case is yet another example of whistleblowers in the industry bringing illegal activity to light. Two individuals working with JPMorgan Chase Bank are reported to have approached authorities about these practices of misrepresenting VA loans. The whistleblowers are reportedly mortgage loan brokers from Atlanta, Georgia who filed suit back in 2006.

Last month another whistleblower working for Citigroup brought allegations against her employer for encouraging illegal behavior amongst their quality control managers. Citigroup’s unscrupulous behavior may have remained hidden if it weren’t for a single honest worker.

As James E. Butler Jr., co-lead counsel of the JPMorgan Chase case, remarked in a statement, “We are proud to be part of an effort to return tens of millions of dollars to the government for fraud that would have otherwise gone undetected.”