Another Real Estate Scam Uncovered - 13 Banks Accused of Defrauding Veterans, Treasury

Real Estate Scam of the Day: 13 Banks Accused of Defrauding Veterans, Treasury

The Interest Rate Reduction Refinancing Loans (IRRRL) program was intended to help veterans refinance their home mortgages without having to pay certain fees. However, 13 major lenders now stand accused of using the program to “defraud both our nation’s veterans and the United States Treasury of millions of dollars” through faulty implementation of the program[1]. Two Georgia mortgage brokers blew the whistle on the fraud some time ago but the case was kept under wraps until recently, when it was unsealed. The brokers claim that the lenders instructed them to include additional, prohibited fees like attorneys fees into allowed fees like title examination fees. The court filing states that “defendant lenders over-charged veterans, charged prohibited fees and then deliberately concealed those facts from the VA to obtain taxpayer-backed guarantees for those loans.”

Furthermore, the lenders are also accused of submitting a variety of false, fraudulent and fabricated documents to get the loans approved for the U.S. Treasury guarantee[2]. “Tens of thousands of the VA loans have gone into default or resulted in foreclosure,” according to the lawsuit, which also alleges that up to 90 percent of the 1.2 million loans refinanced through IRRRL in the past ten years may have been affected by the fraud.

This is a repost from Bryan Ellis.

[1] http://www.dsnews.com/articles/major-banks-accused-of-defrauding-veterans-taxpayers-2011-10-14

[2] http://www.thefiscaltimes.com/Articles/2011/10/05/WP-Did-Big-Banks-Defraud-Military-Vets.aspx#page1

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Blog post written by the Dowell Taggart Team of RE/MAX Premier Realty 

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