Whistleblowers Allege Fraud Regarding VA Mortgage Loans

Two whistleblowers, Victor Bibby and Brian Donnelly, brought suit against thirteen lenders on behalf of the United States in connection with fraudulent Department of Veterans Affairs (VA) home mortgage loans.  The suit alleges that the lenders charged borrowers unallowable fees that technically invalidated the VA guarantee.

Certain fees–otherwise typical of a real estate transaction–such as attorney’s fees or settlement closing fees are not allowed in closing a VA loan for purposes of refinancing. The lenders allegedly charged these fees but hid them from borrowers and the VA by disguising them as allowable fees, sometimes bundling them with permitted fees.

The suit is pending in the Northern District of Georgia.

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