Village Capital & Investment will pay at least $425,000 to military borrowers and a $79,380 civil penalty under a US settlement over mortgage interest-rate protections.
The Justice Department announced the agreement on October 19. It resolves allegations that the Nevada-based mortgage company mishandled benefits on at least 41 servicemembers’ accounts and retaliated against borrowers who requested them.
The Servicemembers Civil Relief Act limits interest on qualifying pre-service obligations to six per cent. DOJ alleged that Village Capital failed to apply reductions retroactively to military orders and failed to lower monthly payments by the interest forgiven.
The government also alleged misleading letters telling borrowers that their rates were already below the cap when they were not. Other allegations concerned accelerated principal payments and false reports of delinquency to the Department of Veterans Affairs.
These are the claims resolved by the agreement, not findings from a contested liability trial. The parties chose an out-of-court resolution rather than protracted proceedings.
The settlement requires an initial $425,000 compensation fund, with additional money if necessary to meet the company’s obligations. DOJ will review a further set of accounts requesting benefits after April 1, 2025.
Operational changes accompany the payments. Village Capital must submit revised policies, train relevant staff and give borrowers written explanations when requests are granted or refused. Eligible interest above the cap must be forgiven rather than shifted into higher principal payments.
The agreement also prevents a request for military benefits from being used to worsen an existing credit arrangement or generate an adverse creditworthiness report.
