Village Capital to pay over $500,000 over servicemember mortgage rights allegations

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Village Capital settles VA mortgage case

Highlights

Village Capital & Investment LLC will pay over $500,000, including at least $425,000 to servicemembers and a $79,380 civil penalty, for alleged SCRA violations.
The Justice Department alleges Village Capital failed to retroactively lower interest rates, misled borrowers about rates below 6%, and retaliated with accelerated principal payments and false delinquency reports.
This settlement underscores increased federal enforcement on VA home loan servicers, as SCRA actions since 2011 have secured over $490 million for more than 153,000 servicemembers.

Settlement terms and alleged lending violations

As announced by U.S. Department of Justice, Village Capital & Investment LLC will pay more than $500,000 to resolve allegations that it failed to properly apply Servicemembers Civil Relief Act interest rate protections and retaliated against borrowers who sought those benefits.

Under the settlement, the company is required to pay at least $425,000 to affected servicemembers and a $79,380 civil penalty, the maximum penalty for a first violation of the SCRA. The agreement also requires Village Capital to revise its policies and procedures and provide SCRA training to employees to prevent future violations.

The department alleges the servicer failed to reduce interest rates on pre-service mortgage debt to 6% retroactive to the date borrowers received military orders. It also alleges the company did not lower monthly mortgage payments by the amount of forgiven interest, misled borrowers by saying their rates were already below 6% when they were not, and retaliated against some servicemembers by accelerating principal payments and falsely reporting mortgages as delinquent to the Department of Veterans Affairs.

Broader compliance pressure on mortgage servicers

The case adds to ongoing federal scrutiny of lending and servicing practices affecting military families, particularly in the VA home loan market where compliance with borrower protections carries both legal and reputational risk. Justice Department officials say the action signals that servicers that fail to honor statutory benefits or punish borrowers for asserting their rights face tougher enforcement.

Assistant Attorney General Harmeet K. Dhillon says lenders that ignore SCRA protections undermine military families' trust in financial institutions, while First Assistant U.S. Attorney Sigal Chattah for the District of Nevada says the settlement sends a clear warning to VA home loan servicers. Since 2011, the Justice Department says its SCRA enforcement efforts have secured more than $490 million in monetary relief for over 153,000 servicemembers.

Our earlier article on Pakistan’s push to expand priority-sector lending described the government’s targets to boost housing, agricultural and SME credit, alongside steps to speed up loan processing and simplify documentation. It also outlined planned regulatory reforms and risk-sharing mechanisms aimed at improving banks’ capacity to lend and widening access to formal credit through public-private initiatives.

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