The settlement calls for at least $425,000 in payments to affected servicemembers and a $79,380 civil penalty. The department described the penalty as the maximum for a first violation of the Servicemembers Civil Relief Act, or SCRA. The agreement also requires the VA-guaranteed home-loan servicer to revise its procedures and train employees on the law.

The Justice Department alleged that Village Capital failed to lower the interest rates on at least 41 servicemembers’ eligible mortgages to 6% retroactively to the date they received military orders. It also alleged the company did not reduce monthly mortgage payments to reflect the interest forgiven.

Under the SCRA, qualifying debts incurred before military service can receive an interest-rate cap of 6% during the period of service. The department said Village Capital misled some borrowers by telling them their rates were already below 6% when they were actually higher.

The department further alleged the company retaliated against borrowers seeking the benefit by accelerating principal payments and incorrectly reporting their mortgages as delinquent to the Department of Veterans Affairs.

The settlement addresses the government’s allegations; the announcement did not say Village Capital admitted wrongdoing. The resolution affects servicemembers whose access to mortgage protections was at issue and requires changes intended to prevent similar violations.