Three homebuyers, who are also military veterans, allege the mortgage companies’ referral programs led to higher cost loans.
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The lawsuits are piling up.
The law firm behind a string of lawsuits that have taken aim at the real estate industry filed a new case Wednesday alleging three Missouri mortgage companies violated the Real Estate Settlement Procedures Act (RESPA) through a scheme that targeted veteran and military buyers.
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The complaint was filed in U.S. District Court in Western Missouri — the same court that oversaw the landmark Sitzer | Burnett trial that resulted in a $5.3 billion verdict against major real estate entities.
The new lawsuit alleges that the defendant mortgage companies have engaged in deceptive advertising that makes it seem as though they’re part of the U.S. Department of Veterans Affairs and that buyers are required to use their services to buy homes.
The suit was filed by three homebuyers who are veterans from Tennessee, Texas and Pennsylvania. They named Veterans United Home Loans; Realty Search Solutions, aka Veterans United Realty; and the Mortgage Research Center as defendants.
“Our lawsuit against Veterans United is two-fold,” Steve W. Berman, managing partner and co-founder of Hagens Berman, said in a statement. Hagens Berman is the Seattle-based law firm representing plaintiffs in the case. It also initiated the Moehrl commission lawsuit.
“First, we believe Veterans United has engaged in blatantly illegal practices that have harmed homebuyers through predatory loan practices,” Berman said in the statement. “Second, Veterans United has sought to deceive our nation’s military servicemembers by masquerading as affiliated with the U.S. Veterans Administration.”
Boulware Law, which worked on the Sitzer | Burnett case, is also representing plaintiffs in the case.
In a statement to Inman, Veterans United Home Loans said, “For 24 years we have been committed to serving Veterans and military families with love, care and respect.”
“We’re aware of the lawsuit that was filed,” the company added. “We deny the accusations and look forward to disputing this through the legal process. Because this is pending litigation, we can’t comment further.”
The new lawsuit ultimately alleges that Veterans United has a network of “preferred” agents throughout the country who receive referrals or leads from the company. Those agents pay a portion of their commission — the lawsuit says “around 35 percent” — upon closing.
“These agents are also required to steer their clients to use Veterans United for their home loans,” the lawsuit alleges. “If the agents do not do so, they stop receiving leads.”
The lawsuit also alleges that loans generated through the referrals are more costly and carry higher interest rates than those offered by other lenders.
It also alleges that the companies don’t let homebuyer clients know that they have other options for securing home loans; that active military clients believe Veterans United is the same as the VA; that excessive lending costs are wrapped into loans, thereby inflating costs; and that “preferred agents” in the referral program don’t provide homebuyers with alternative lending options.
In addition to two RESPA violations, the attorneys wrote in the complaint that the alleged conduct also equates to unjust enrichment and violates Missouri consumer protection laws.
The proposed class includes anyone who has bought a home using Veterans United Home Loans since Jan. 1, 2020. The lawsuit seeks injunctive relief, treble damages, single damages and attorneys’ fees.
New suit follows others
The new suit comes amid a flurry of activity on the part of Hagens Berman. In August, the firm called on consumers to get in contact if they had taken part in a home transaction since 2021.
By September, Hagens Berman represented a homebuyer in a class action lawsuit targeting Zillow that alleged the company used “deceptive and illegal” practices to inflate homebuyer costs through its lead generation tactics.
That lawsuit was expanded two months later to add plaintiffs in more states, new brokerage defendants and to broaden the scope of the allegations. The amended complaint added a new Racketeer Influenced and Corrupt Organizations Act (RICO) count that took aim at Zillow Home Loans.
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