VA Loan Servicer Village Capital Settles SCRA Interest-Cap Allegations for Over $500,000

Where it stands

1. ✓

   Mar 2020–Apr 2025

   Period of SCRA rate requests DOJ reviewed

2. ✓

   Oct 19, 2026

   Justice Department announces the settlement agreement

3. Next four yearsNow

   Agreement stays in effect; DOJ can review compliance

1. ◆

   What happened

   On October 19, 2026, the Justice Department announced that Village Capital & Investment LLC, a servicer of VA-guaranteed home loans, will pay over $500,000 to resolve allegations that it failed to properly apply Servicemembers Civil Relief Act (SCRA) interest rate benefits to at least 41 servicemembers' mortgages. The Department alleges the company did not cut rates on pre-service debts to 6% back to the date of the servicemember's orders and did not lower monthly payments by the interest forgiven. It also allegedly told some borrowers their rate was already below 6% when it was above 6%, and allegedly retaliated against servicemembers who asked by accelerating principal payments and falsely reporting their loans to the VA as delinquent.

2. ◷

   Where it stands

   This is a settlement agreement, not a court judgment. The agreement describes the claims as the United States' allegations, and no court has ruled on them. Village Capital will deposit at least $425,000 into a fund to compensate servicemembers the United States determines were harmed, pay a $79,380 civil penalty, revise its SCRA procedures and train its staff. The agreement runs for four years. If Village Capital breaches it and doesn't cure the breach within 30 days of notice, the United States may sue to enforce it in federal court in Nevada.

3. ⌂

   Who it affects

   Village Capital borrowers whose SCRA requests were mishandled. The United States reviewed requests made between March 1, 2020 and April 1, 2025 and identified 41 accounts where Village Capital incorrectly applied SCRA benefits. Under the agreement, the United States will also review requests made from April 1, 2025 through the agreement's effective date, and the United States, not the borrower, decides who is paid and how much. The release does not describe a claim process.

4. ✓

   What to do now

   If your mortgage predates your military service, 50 U.S.C. § 3937 caps it at 6% during service and for one year after. Send your servicer written notice and a copy of your orders (or another appropriate indicator of military service) no later than 180 days after you leave service. A loan you took out after you were already on active duty does not qualify. If you think a servicer ignored your request, DOJ says to contact the nearest Armed Forces Legal Assistance office (legalassistance.law.af.mil); its enforcement work is at servicemembers.gov. Our SCRA mortgage guide walks through the rules.