JPMorgan Chase Settles Case over VA Loans
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UPDATED: Mar 13, 2012
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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.”