VA Servicer Settles SCRA Claims 

The U.S. Department of Justice recently announced that a servicer of VA-guaranteed home loans will pay more than $500,000 to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA). According to the Department, the servicer failed to properly apply SCRA interest rate benefits to the mortgages of at least 41 servicemembers and then retaliated against borrowers who asserted their rights. The alleged misconduct included failing to reduce the interest rate on pre-service debts to 6% retroactive to the date of military orders, failing to lower monthly payments by the amount of interest forgiven, and misleading borrowers by telling them their rate was already below 6% when it was in fact higher. 

Under the settlement, the company will pay at least $425,000 to affected servicemembers and a $79,380 civil penalty, the maximum for a first SCRA violation. The company must also revise its policies and procedures to prevent future violations and provide SCRA training to its employees.