The chairman of the House Veterans’ Affairs Committee ordered his staff to begin an investigation Friday into allegations that some of the nation’s largest lending institutions have cheated veterans and taxpayers out of hundreds of millions of dollars by charging illegal fees in home refinancing loans.

Committee staff members met Friday with officials from the Department of Veterans Affairs to discuss the charges, which are made in a whistleblower lawsuit unsealed this month by a federal court in Atlanta.

“I will reserve judgment on the appropriate next course of action, to include the potential for a full Committee hearing, after having the opportunity to review the results of the staff investigation,” Rep. Jeff Miller (R-Fla.), chairman of the committee, wrote in a letter Friday to Rep. Bruce Braley (Iowa), the ranking Democrat on the committee’s subcommittee on economic opportunity.

Braley on Wednesday requested that the committee hold a hearing to examine the allegations. “It is disconcerting that charges have arisen that banks are not following rules governing fees that can be charged for refinancing loans,” Braley wrote in a letter to Miller.

On Tuesday, Sen. Jon Tester (D-Mont.), a member of the Senate Veterans’ Affair Committee, sent a letter to Attorney General Eric H. Holder Jr. demanding that the Justice Department investigate the allegations. “If true, this type of behavior is illegal and it’s un-American,” wrote Tester.

Under a VA program, veterans are able to refinance with loans guaranteed by the government, enabling them to lower their interest rates or shorten the terms of their mortgages. The rules prohibit lenders from charging attorney fees.

The lawsuit was brought under the False Claims Act by two mortgage brokers in Georgia who allege that the banks instructed them to disguise attorney charges by listing them as part of the title examination fee.

The suit, which was filed in 2006 but remained sealed while the allegations were investigated, seeks to recover damages and civil penalties from 13 lending institutions on behalf of the U.S government.

The Justice Department has notified the federal court in Atlanta that it is not taking over the case but will consider doing so at a later date. “I request that you provide justification for this decision, and urge you to reconsider,” Tester wrote in his letter to Holder. “I also request that you investigate the full extent of these illegal activities.”

The Justice Department has not yet responded to the request, according to Tester’s office.

Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking subcommittee on financial institutions and consumer protection and a member of the Veterans’ Affairs Committee, has called on the departments of Justice and Veterans Affairs to release the results of any internal investigations related to the suit.

Over the last 10 years, more than 1.2 million of the refinanced loans have been made to veterans and their families, and as many as 90 percent may have been affected by the alleged fraud, according to attorneys for the plaintiffs.

The loans are guaranteed by the federal government, making them less risky and more profitable for banks. “That resulted in better prices from the loans that banks and mortgage brokers sold to investors,” Tester said. “And as more of these loans went into default or foreclosure, it was ultimately American taxpayers who were on the line.”

Tens of thousands of the VA loans have gone into foreclosure, costing taxpayers hundreds of millions of dollars, and the costs will rise as more go into default, according to the suit.