The Servicer That Denied the 6% Cap — Then Punished Asking

DOJ alleged a VA loan servicer refused servicemembers their legal 6% interest cap, lied that rates were already below it, then retaliated against those who asked — accelerating payments and falsely reporting them delinquent to the VA. Settled for $500K+.

The Servicemembers Civil Relief Act caps interest at 6% on pre-service debts once a servicemember is called to duty. DOJ alleged Village Capital failed to reduce rates retroactive to military orders for at least 41 servicemembers’ mortgages, and failed to cut their monthly payments by the forgiven interest.

Worse, per the allegations: the company told some borrowers their rate was already below 6% when it was in fact above 6% — and retaliated against servicemembers who requested their benefits by accelerating principal payments on their loans and falsely reporting their mortgages as delinquent to the VA.

The settlement requires more than $500,000 in compensation and penalties, revised SCRA policies, and employee training. It resolves allegations by agreement; it is not a criminal conviction.

"When lenders refuse to honor the benefits guaranteed under the Servicemembers Civil Relief Act"
— U.S. Department of Justice, Office of Public Affairs

Source: U.S. Department of Justice, Office of Public Affairs. Case file in the VA Fraud case files — part of the VA Fraud record. Cases are published as the courts decided them; amounts are stated as the Justice Department states them (billed, stolen, or ordered in restitution, as labeled).