Rep. Bruce Braley is calling for an investigation of allegations that Wall Street banks have been defrauding veterans and taxpayers out of millions of dollars by intentionally disguising illegal fees in veteran home financing loans.

Rep. Bruce Braley

“If a bank intentionally preyed on veterans who’ve put their lives on the line for this country just to pad their profits, that’s beyond the pale,” Braley, a Waterloo Democrat and member of the U.S. House Veterans Affairs Committee, said.

Braley made his request for a probe in a letter to House Veterans Affairs Committee Chair Jeff Miller and Ranking Member Bob Filner.

The allegations, which were contained in a whistleblower lawsuit in Atlanta, suggest “a staggering number of veterans could have been impacted by this alleged scam,” he said in a conference call with reporters.

It’s alleged that several banks and mortgage companies, including Bank of America and J.P. Morgan Chase, violated federal law that specifically prohibit charging attorney fees or settlement closing fees as part of the loan origination process when the loans are backed by the Department of Veterans Affairs, Braley explained. The fees supposedly were disguised in the paperwork, hiding them from the borrowers and Veterans Affairs.

Reports indicate that over the last 10 years, more than 1.2 million VA-backed loans have been made to veterans. Up to 90 percent of those loans might have been affected by the alleged fraud.

Braley is unaware any Iowa veterans have been affected, but said there has been little time to gather feedback since the allegations became public. He hopes the publicity encourages veterans who financed or refinanced homes through Veterans Affairs programs check their paperwork.

If not Iowa banks are involved it might be “an indication that the practices that go on in Iowa banks can differ dramatically from the practice of these Wall Street banks that often time are involved in these abusive practices,” he said.

Braley’s letter can be seen here.