Some of the nation’s biggest banks and mortgage companies have defrauded veterans and taxpayers out of hundreds of millions of dollars by disguising illegal fees in veterans’ home refinancing loans, according to a whistleblower suit unsealed in federal court in Atlanta.

The suit accuses the companies, including Wells Fargo, Bank of America, J.P. Morgan Chase and GMAC Mortgage, of engaging in “a brazen scheme to defraud both our nation’s veterans and the United States treasury” of millions of dollars in connection with home loans guaranteed by the Department of Veterans Affairs.

“This is a massive fraud on the American taxpayers and American veterans,” James E. Butler Jr., one of the lawyers bringing the suit, said Tuesday.

Tens of thousands of the VA loans have gone into default or resulted in foreclosures, resulting in “massive damages” to the U.S. government, the suit alleges. The faulty loans will cost taxpayers hundreds of millions of dollars, with the costs rising as more VA loans go into default, according to the suit.

The two mortgage brokers who brought the suit said in an interview that they were instructed by the lenders not to show attorney’s fees on their estimates, but to add them to the title examination fee.

Under VA rules, lenders can charge veterans for recording fees and taxes, credit reports and other customary fees, but they are not allowed to charge attorney’s fees or settlement closing fees. “It was gut-wrenching to us, seeing the brazenness” of the lenders, broker Victor E. Bibby said.

The case involves refinanced loans that are available to retired or active-duty veterans on homes they already own. The program is aimed at giving veterans the opportunity to lower their interest rates or shorten the terms of existing home mortgages.

The whistleblower suit, which was unsealed Monday, seeks to recover damages and civil penalties on behalf of the U.S. government. The Justice Department has notified the U.S. District Court that it is not taking over the case but is reserving the right to intervene at a later date, according to court papers.

“The government has not yet made a decision about whether to intervene in this case,” Sally Quillian Yates, United States attorney for the Northern District of Georgia, said Tuesday. “As the case develops, we will continue to evaluate the merits of the case, and we will consider intervening . . . if it becomes appropriate to do so.”

“This is a very significant case,” Patrick Burns, spokesman for the nonprofit Taxpayers Against Fraud, said Tuesday. “It deals with widespread fraud from veterans who were personally pickpocketed for hundreds if not thousands of dollars, and the liability has been shoved on the federal government.”

During the past decade, more than 1.2 million of the refinanced loans have been made to veterans and their families, and up to 90 percent may have been affected by the alleged fraud, according to attorneys for the plaintiffs.

“The banks collected hundreds of millions of dollars in hidden fees from veterans, and they obtained hundreds of millions of dollars in loan guarantees they otherwise wouldn’t have received,” said Mary Louise Cohen, a Washington attorney who is also representing the whistleblowers.

The case has been brought under the False Claims Act by two mortgage brokers in Georgia, and has been under federal seal since it was filed in 2006 in U.S. District Court for the Northern District of Georgia. Cases brought under the act often remain under seal for years while they are investigated.

Three of the companies named in the suit — Wells Fargo, Bank of America and SunTrust Mortgage — declined to comment.

Speaking on background, representatives of two banks said the government’s decision to not intervene yet means the Justice Department does not think it’s a strong case. But Burns, whose organization monitors whistleblower cases, said the government’s decision to allow private law firms to take the lead was not unusual given limited resources for investigating alleged fraud.

“God help any bank that takes this case to trial,” Burns said. “A jury’s only question is going to be ‘How much do they have?’ ”

The suit includes as an exhibit a loan document in which Wells Fargo reported a $950 title examination rather than “a reasonable and customary fee” of between $125 and $200. Banks collected anywhere from $300 to $1,000 per loan in hidden fees by adding the prohibited charges to the allowable fees, according to the suit.

Bibby, one of the plaintiffs, is president and chief executive of U.S. Financial Services, a Georgia-based corporation that provides mortgage services in seven states. As brokers, Bibby and the company’s vice president of operations, Brian J. Donnelly, helped veterans choose lenders and complete the application forms. Since 2001, their company has helped set up thousands of the veterans’ refinancing loans, according to the suit.

In 2005, Donnelly said he read the rules in a VA handbook governing the fees that could be charged for the transactions, which are known as Interest Rate Reduction Refinancing Loans, or IRRRL loans.

Donnelly, who served three years in the Army, did further research and said became convinced that the charges were fraudulent. “We knew it was wrong,” he said.

“We started putting two and two together,” Bibby said. “It was kind of like a coconut hitting us on the head. They’re hiding it intentionally.”

Bibby and Donnelly said they approached the lenders, who insisted they were doing nothing wrong. The brokers reported their allegations to the U.S. government, providing copies of hundreds of “fradulent transactions.” Upon filing the whistleblower lawsuit, the court ordered the case sealed.

Earlier this year, Wells Fargo agreed to a $10 million settlement in a separate class-action lawsuit that alleged it improperly added attorney’s fees to about 60,000 refinancing loans for veterans.

Other companies named as defendants include CitiMortgage, Washington Mutual Bank, PNC Bank (which acquired National City Mortgage), Countrywide Home Loans, Mortgage Investors, First Tennessee Bank (which acquired First Horizon Home Loan), Irwin Mortgage and New Freedom Mortgage.

Staff writer Lisa Rein contributed to this report.