A Henderson, Nevada-based mortgage servicer that specializes in VA-guaranteed home loans will pay more than $500,000 after federal prosecutors accused it of cheating active-duty servicemembers out of legally mandated interest rate reductions and retaliating against those who asked for them. The settlement, announced Monday, covers at least 41 military borrowers whose mortgages were allegedly mishandled by the company.
Village Capital & Investment LLC will pay a minimum of $425,000 in restitution to the affected borrowers plus a $79,380 civil penalty, according to the US Attorney Nevada
announcement. That civil penalty, per the
U.S. Department of Justice
, represents the maximum statutory penalty allowed for a first-time violation under the Servicemembers Civil Relief Act.
Federal prosecutors allege Village Capital failed to properly calculate and lower interest rate caps on the mortgages of those 41 active-duty troops, and then retaliated against borrowers who tried to assert their rights to the reduction, the Justice Department notes. Under the federal law, creditors must cap interest rates at 6 percent annually on pre-service debts during active duty, and for residential mortgages, that cap stretches through active service and for a full year afterward, per the Justice Department's own explanation of the statute.
A Repeat Visitor to Federal Scrutiny
This isn't Village Capital's first run-in with federal regulators over its treatment of military borrowers. In December 2018, the Consumer Financial Protection Bureau sued the company in the U.S. District Court for the District of Nevada, alleging it misled military veterans about VA mortgage refinancing benefits. The bureau proposed a stipulated judgment that, if entered, would require $268,869 in consumer redress and a $260,000 civil penalty.
Village Capital, the Henderson-based mortgage servicer, has also undergone major shifts in its business since then. In June 2023, the company sold the mortgage servicing rights for a $10 billion portfolio of roughly 45,000 Ginnie Mae home loans to Planet Home Lending, LLC, according to a release carried by PR Newswire.
Officials Vow Continued Enforcement
Sigal Chattah, First Assistant United States Attorney for the District of Nevada, framed the settlement as a warning to the broader industry. “Protecting our nation's heroes from unlawful lending practices is a fundamental duty, not an option,” Chattah said. “By failing to apply the interest rate cap correctly and misrepresenting mortgage terms, Village Capital & Investment LLC breached the trust of servicemembers. This settlement serves as a clear directive to VA home loan servicers everywhere: illegal lending practices that harm servicemembers will be met with swift accountability and strict enforcement.”
Assistant Attorney General Harmeet K. Dhillon of the DOJ Civil Rights Division echoed that message, stating that when mortgage lenders refuse to honor SCRA benefits or retaliate against military personnel who assert their rights, they violate federal law and erode the trust military families place in financial institutions, according to the Justice Department.
Beyond the financial payouts, the settlement requires Village Capital to overhaul its internal loan servicing policies and procedures and to provide mandatory SCRA compliance training to its staff, the agency notes, aiming to prevent future rate-cap failures.
Part of a Larger National Push
The case fits into a much broader pattern of federal enforcement on behalf of military borrowers. Since 2011, the Justice Department's nationwide enforcement of the Servicemembers Civil Relief Act has secured more than $488 million in monetary relief for over 152,000 servicemembers across lending, vehicle, and housing protection cases.
