The Bureau of Consumer Financial Protection filed a complaint in federal court that alleges Village Capital & Investment LLC, a non-bank mortgage company headquartered in Henderson, Nev., misled veterans by overstating the benefits of refinancing their mortgages. The case was filed in the United States District Court District of Nevada on Dec. 4.

Village Capital offers a product known as an Interest Rate Reduction Refinancing Loan, which allows veterans, with a loan guaranteed by Veterans Affairs, to refinance their mortgages at lower interest rates.

As described in the complaint and proposed order, the Bureau alleges that Village Capital violated the Consumer Financial Protection Act of 2010 by misleading veterans regarding its Interest Rate Reduction Refinancing Loans, which allow veterans to refinance their mortgages at lower interest rates with a loan guaranteed by Veterans Affairs.

To demonstrate the savings the refinances generated, Village Capital relied on flawed formulas that produced inaccurate results, so the figures used in [Excel] worksheets and quoted to consumers were misleading. According to the filing, the Excel spreadsheets, and therefore the worksheets presented to consumers, were deceptive because they misrepresented the cost savings to the consumer of the refinanced loan including: Inflating the future amount of principal owed under the existing mortgage by underestimating the proportion of the consumer’s existing monthly payment that is applied to principal. Underestimating the future amount of the refinanced mortgage’s monthly payments by overestimating the loan’s term and overestimating the total monthly benefit of the loan after the first month.

The Bureau and Village Capital also filed a proposed stipulated final judgment and order to resolve the claim. If entered by the court, the proposed order would require Village Capital to pay $268,869 in redress to consumers and a civil penalty of $260,000.