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Plaintiffs oppose Veterans United motion to dismiss RESPA class-action suit

Created at 10 Jul · 7:51 PM1 source↑ Market-relevant
IN SHORT

Plaintiffs are opposing Veterans United Home Loans' motion to dismiss an amended class-action lawsuit alleging illegal kickbacks and steering schemes that led to overpriced loans for borrowers. The case is being overseen by the U.S. District Court for the Western District of Missouri.

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Key Numbers

15named plaintiffs in amended suit
8claims in amended complaint
5states with consumer protection claims initially
35%commission agents allegedly pay to Veterans United
1.05%of home sale price agents allegedly pay
6.5%loan rate initially offered to a customer
6.75%loan rate customer was locked into
$6,000alleged cost to borrower due to rate change
$5,000 to $10,000less competitor loans cost than Veterans United

Who's Involved

Veterans United Home Loans
Nation's largest lender of VA mortgages, accused of illegal kickbacks and steering
Realty Search Solutions LLC
Veterans United's real estate arm, doing business as Veterans United Realty
Fifteen named plaintiffs
Opposing Veterans United's motion to dismiss amended RESPA class-action suit
Hagens Berman
Law firm representing the plaintiffs
Chad Moller
Corporate communications manager for Veterans United Home Loans
Plaintiffs oppose Veterans United motion to dismiss RESPA class-action suit

↳ Why This Matters

This case highlights potential predatory lending practices and deceptive marketing targeting veterans, raising questions about consumer protection and fair competition in the mortgage industry. The outcome could impact how lenders market VA-related services and the enforcement of RESPA regulations.

Key facts

  • Fifteen plaintiffs allege Veterans United Home Loans engaged in illegal kickbacks and steering, inflating loan costs.
  • The lawsuit, filed in the U.S. District Court for the Western District of Missouri, accuses the company of misleading consumers about its affiliation with the VA.
  • Plaintiffs argue they paid for settlement services covered under RESPA and that "illegal kickbacks" increased their transaction costs.
  • Veterans United denies the allegations, stating they are a private lender and have always been clear about their non-affiliation with the VA.
  • The amended complaint includes violations of RESPA and consumer protection laws in multiple states, though some claims have been dropped.

Plaintiffs in a class-action lawsuit are opposing Veterans United Home Loans' motion to dismiss their amended complaint, which alleges the company engaged in an illegal kickback and steering scheme that resulted in overpriced loans for borrowers. The case, overseen by the U.S. District Court for the Western District of Missouri, began in February with accusations that Veterans United, the nation's largest lender of VA mortgages, misled homebuyers about its affiliation with the U.S. Department of Veterans Affairs.

The amended complaint, filed in May, increased the number of named plaintiffs from three to 15 and expanded the claims to eight, including violations of the Real Estate Settlement Procedures Act (RESPA) and consumer protection laws in several states. Veterans United had urged the court to dismiss the suit, characterizing it as a baseless copycat case. The plaintiffs argue that they paid for settlement services covered under RESPA and that "illegal kickbacks" fostered by the lender and its network of real estate agents inflated their transaction costs through higher mortgage rates and fees.

According to court filings, the plaintiffs contend that Veterans United deliberately chose a name and branding that leverages the trust veterans associate with the VA, despite being a private, for-profit corporation founded by individuals with no military service. They point to the company's promotion as the No. 1 VA lender and its use of "military advisers" while allegedly burying disclaimers about its non-affiliation.

Veterans United's corporate communications manager, Chad Moller, stated that the plaintiffs' attorneys have undermined their own claims by abandoning the assertion that the company claimed to be part of the VA. He emphasized that Veterans United is a private mortgage lender and has always been clear about its status, highlighting its service and support for veterans and military families.

The steering allegations center on a business model where agents receiving referrals are allegedly required to direct buyers to Veterans United for financing, with compliance monitored via an app called AgentDash. Agents reportedly pay a significant portion of their commissions to the company. The plaintiffs provided an example of a customer being locked into a higher interest rate than initially offered, costing over $6,000, and cited testimony suggesting competitor loans were substantially cheaper. They described this as a "bait and switch" policy. The plaintiffs have since dropped claims in Texas that were time-barred and removed one plaintiff from Ohio due to statutory time restrictions.

Frequently asked questions

RESPA, or the Real Estate Settlement Procedures Act, is a U.S. federal law that ensures consumers are provided with full disclosures of all closing costs and settlement fees when applying for and receiving a mortgage.

Plaintiffs allege Veterans United engaged in illegal kickbacks and steering, leading borrowers to overpriced loans, and misled consumers about its affiliation with the VA.

Veterans United denies the allegations, stating it is a private lender and has always been clear about its non-affiliation with the VA, and that the lawsuit is baseless.

Yes, plaintiffs dropped claims in Texas that were time-barred and removed one plaintiff from Ohio due to statutory time restrictions.

What Happens Next

01The court will rule on Veterans United's motion to dismiss the amended complaint.

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Cadence

How It Developed

Fifteen named plaintiffs allege Veterans United Home Loans engaged in an illegal kickback and steering scheme.
The accusations were reiterated in court filings as plaintiffs opposed a motion to dismiss an amended complaint.
The case began in February with plaintiffs suing Veterans United and its real estate arm.
The original complaint accused Veterans United of misleading homebuyers about its connection to the VA.
Veterans United filed a motion to dismiss the original complaint in April.
In May, plaintiffs filed an amended complaint, increasing named plaintiffs and claims.
Veterans United Home Loans and Veterans United Realty urged the court to dismiss the amended complaint last month.
Plaintiffs stated in court filings that the request by Veterans United to dismiss the amended complaint should be denied.

Sources

T1
Plaintiffs oppose Veterans United motion to dismiss amended RESPA class-action suitHousingWire

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