Village Capital to pay $500,000 to settle SCRA mortgage allegations

Village Capital & Investment LLC has agreed to pay more than $500,000 to resolve federal allegations that it mishandled mortgage interest-rate protections for servicemembers and retaliated against borrowers. The settlement, announced by the Department of Justice, includes at least $425,000 in compensation for affected borrowers and a $79,380 civil penalty.

The Department of Justice alleges that between March 2020 and the settlement date, the company failed to properly apply the 6% interest rate cap mandated by the Servicemembers Civil Relief Act (SCRA) for qualifying debts. Specifically, officials claim the servicer did not make rate reductions retroactive to the date borrowers received military orders and failed to lower monthly payments to reflect forgiven interest. The company also allegedly misrepresented interest rates in letters, claiming they were already below the 6% cap.

Furthermore, the DOJ alleges that Village Capital retaliated against servicemembers who sought these protections by accelerating principal payments and falsely reporting mortgages as delinquent to the Department of Veterans Affairs. Under the terms of the agreement, Village Capital does not admit liability.