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Countless veterans deal with foreclosure and it's not their fault. The VA might help

By Chris Arnold, Robert Benincasa
baidu.com
Updated Thursday, November 16, 2023 • 9:53 AM EST

Heard on Morning Edition

Becky Queen remembers opening the letter with the foreclosure notice.

"My heart dropped," she said, "and my hands were shaking."

Queen lives on a little farm in rural Oklahoma with her hubby, Ray, and their two young kids. Ray is a U.S. Army veteran who was injured in Iraq. Since the 1940s, the federal government has assisted veterans like him purchase homes through its VA loan program, run by the Department of Veterans Affairs.

And now the VA has put this household on the brink of losing their home.

"I didn't do anything incorrect," says . "The only thing I did was trust a company that I'm supposed to rely on with my mortgage."

Like countless other Americans, the Queens made the most of what's called a COVID mortgage forbearance, which permitted property owners to avoid mortgage payments. It was set up by Congress after the pandemic hit for individuals who lost income.

But an NPR examination has actually found that thousands of veterans who took a forbearance are now at danger of losing their homes through no fault of their own. And while the VA is working on a method to repair the problem, for numerous it could be too late.

After NPR initially released this story, a group of 4 U.S. Senators sent out a letter to the VA asking it to immediately stop foreclosing on the homes of veterans and servicemembers. It's unclear if the VA will do that.

For the Queens, this all started in September of 2021, when Becky's mother died of COVID-19. She had to take an extended leave from work and lost her job.

So last year, with their cost savings diminishing, the couple says they called the business that handles their mortgage, Mr. Cooper, and were informed they might skip 6 months of payments. And as soon as they got back on their feet and might begin paying again, the couple states they were informed, they wouldn't owe the missed out on payments in a huge swelling amount.

"I extremely specifically asked 'how does this work?'" states Becky Queen. "They stated we're taking all of your payments, we're bundling them, and we're putting them at the end."

That is, the missed payments would be transferred to the back end of their loan term so they might just start making their normal mortgage payment again.

But that's not how it exercised.

In October 2022, the Department of Veterans Affairs ended the so-called Partial Claim Payment program, or PCP, that allowed house owners to do that. This happened even though the mortgage market, housing supporters and veterans groups all warned the VA not to end the program, saying countless house owners needed to catch up on missed out on payments. Rates of interest had increased a lot that many could not pay for to refinance or return on track any other method.

Ray Queen says no one told him about any of this.

"How does that happen?" Queen asked. "This is expected to be a program that you all have to help individuals in times of crisis, so you do not take their house from them."

The Queens say they tried to come off their forbearance in February of this year and resume paying their mortgage. They were both working again. But they ran into hold-ups with the mortgage company.

Then, in September, the couple states they were informed they needed to come up with more than $22,000, which they don't have, or either sell their home or get foreclosed on.

Their mortgage servicing business, Mr. Cooper, said in a declaration it "checked out every possible opportunity to work through a service for this client." But it said the VA needs better loss-mitigation alternatives and referred NPR to a letter from supporters, market and veteran groups advising the VA to restart the PCP program.

The VA "has truly let people down"

"The Department of Veterans Affairs has truly let individuals down," states Kristi Kelly, a customer legal representative in Virginia who states she is hearing from a lot of other veterans in the same scenario as Ray and Becky Queen.

"The house owners entered into COVID forbearances, they were ensured guarantees, and there were certain representations that were made," says Kelly. "And the VA basically pulled the rug out from under everybody."

For some property owners, ending the program may not imply foreclosure, however it still suggests a monetary hardship.

"A number of these individuals have 2 or 3% rate of interest loans," Kelly says. With the PCP program they could keep that interest rate. But now, she states, the only way they'll have the ability to save their home is to get in into a loan modification where the rates of interest will be around today's market rate of 7.5%.

"For many people, their payments will increase by $600 or $700 a month, since the VA has actually decided to end the partial claim program."

Many homeowners can't afford such a substantial increase in their monthly payment.

According to the information company ICE Mortgage Technology, 6,000 homeowners with VA loans who had COVID forbearances are currently in the foreclosure process. And 34,000 more are overdue.

Kelly states most other homeowners in America - people with FHA loans, for example, or loans backed by Fannie Mae and Freddie Mac - still have methods to avoid foreclosure by moving missed payments to the back of the loan term.

But property owners with VA loans do not, because the VA ended that program. So veterans are being treated even worse than a lot of other house owners, Kelly stated.

"Service members remain in a position where they're going to lose their home," she states. "And for many individuals, that's everything they work for - and all their wealth remains in their homes."

VA has a plan to help, but it could be far too late

The Department of Veterans Affairs states it had no option but to end the program.

"We had a short-term authority for that particular program throughout COVID," states John Bell, executive director of the Veterans Benefits Administration's Loan Guaranty Service. "It wasn't part of our normal authority."

Some in the market believe the VA did, in fact, have the authority to extend the program. But in either case, it ended it.

Now, however, the VA is taking the circumstance seriously.

NPR has learned that the VA is working on a new program to change the old one. It will operate in a various method however to comparable result, to save people from foreclosure. Bell says it's going to take 4 to 5 months to get it up and running.

That's too long for numerous of those 6,000 VA homeowners already in the foreclosure procedure. Not to point out the many more who are overdue.

Already, information shows that more VA house owners have actually been heading into foreclosure since the VA ended its PCP program. The very same is not real for FHA loans or loans backed by Fannie Mae or Freddie Mac.

Will the firetruck show up far too late?

With so many homeowners at threat, there's growing pressure on the VA to stop foreclosing on veterans until it gets its repair up and running.

"There must be a time out on foreclosures," says Steve Sharpe, a senior attorney at the National Consumer Law Center. "Veterans should really be able to have a capability to access this program when it comes online because it's been so long because they've had something that will truly work.

Sharpe states the VA might likewise restart the PCP program that it closed down. "They have the authority to do both," he states.

Pausing foreclosures seems like an excellent concept to veteran Ray Queen in Oklahoma.

"Let us keep paying towards our regular mortgage in between once in a while," he states. "Then when the VA has that repaired we can come back and attend to the situation. That looks like the adult, fully grown thing to do, not put a household through hell."

NPR repeated Ray Queen's plea to John Bell at the VA straight. Bell said the VA is "checking out all options at this point in time."

"We owe it to our veterans to make certain that we're providing every chance to be able to remain in the home," Bell said.

Wednesday, a group of U.S. Senators sent out a letter to the VA urging them to put a hold on anymore foreclosures.

"Without this pause, countless veterans and servicemembers could needlessly lose their homes," Sens. Sherrod Brown, Jon Tester, Jack Reed, and Tim Kaine, all Democrats, wrote in a letter to VA Secretary Denis McDonough. "This was never the intent of Congress."

Tester, of Montana, chairs the Veterans' Affairs Committee, and Brown, of Ohio, chairs the Banking Committee. They asked the VA "to implement an immediate time out on all VA loan foreclosures where customers are likely to be eligible for VA's new ... program until it is offered and customers can be evaluated to see if they certify."

Ray and Becky Queen are hoping the VA does let people keep their homes till the new program can use them a method to get present on their mortgages. Because if the firetruck reveals up after your home has actually burned down, it's not going to do much great for the thousands of veterans and service members who need aid now.

Transcript

LEILA FADEL, HOST: An NPR investigation has discovered that countless U.S. military service members and veterans could lose their homes through no fault of their own. As NPR's Chris Arnold reports, the Department of Veterans Affairs is working on a fix. But it could be too late.CHRIS ARNOLD, BYLINE: Ray and Becky Queen are showing us around their farm in Bartlesville, Okla.BECKY QUEEN: This is Cagney and Lacey, our ducks.ARNOLD: The couple lives here with their 2 young kids. Ray served in Iraq in the Army. Inside their home, he says that he was injured by an improvised explosive gadget, or IED.RAY QUEEN: And simply so you understand, I have mental retardation from my time in Iraq. So there's a lot of different things that don't work the method they're supposed to anymore. And my memory is not great.ARNOLD: For decades, the federal government's assisted veterans like Queen to purchase homes through its VA loan program. But now the VA has put this household on the brink of losing their house.B QUEEN: This is the letter that my hubby and I got yesterday specifying that they're starting foreclosure proceedings.ARNOLD: What's happening is that like millions of other Americans, the Queens made the most of what's called a COVID mortgage forbearance. It was established by Congress after the pandemic hit for people who lost income. When Becky's mother passed away of COVID, she had to take a prolonged leave from work and lost her task. Last year, the couple says their mortgage company informed them that they could skip 6 months of payments while they returned on their feet and after that just start paying their mortgage again.B QUEEN: I very specifically asked, how does this work? And they said, we're taking all of your payments. We're bundling them, and we're putting them at the end.ARNOLD: That is, the missed out on payments would relocate to the back end of their loan term so they could resume their normal mortgage payment. But that is not how it worked out, because a year ago in October, the Department of Veterans Affairs ended the program that allowed property owners to do that, despite the fact that housing advocates and the mortgage industry and veterans groups all alerted them not to end the program due to the fact that countless house owners needed to capture up on missed out on payments. Interest rates, too, had risen a lot that many could not manage to refinance or return on track any other method. Ray Queen says nobody told him about any of this.R QUEEN: How does that take place? This is supposed to be a program that y' all need to assist individuals in times of crisis so you don't take their home from them.ARNOLD: The couple states in September, they were told that they needed to come up with a substantial payment - upwards of $22,000, which they do not have - or sell their home or get foreclosed on.B QUEEN: My heart dropped, and, like, my hands were shaking.KRISTI KELLY: The Department of Veterans Affairs has truly let people down.ARNOLD: Kristi Kelly is a consumer legal representative in Virginia who's hearing from a lot of veterans who remain in the exact same boat.KELLY: The homeowners entered into COVID forbearances. They were made sure promises, and the VA basically pulled the rug out from under everybody.ARNOLD: Kelly says for a lot of other property owners in America, there are still methods to move your missed out on payments to the back of the loan term so you can avoid getting foreclosed on, however not if you have a VA loan. So she says veterans are being dealt with even worse than most other homeowners.KELLY: Service members are going to lose their home, and for a lot of individuals, that's everything they work for and all their wealth, remain in their homes.ARNOLD: For its part, the Department of Veterans Affairs states it had no option however to end the program. John Bell heads up the VA's home financing division.JOHN BELL: We had a short-term authority for that specific program throughout COVID.ARNOLD: Some in the market think the VA did actually have the authority to extend the program. Now, though, NPR has actually learned that the VA is dealing with a new program to change the old one, but that's still 4 or 5 months away - too long for a lot of the 6,000 property owners with VA loans who remain in the foreclosure process. Not to discuss there's 34,000 more who were overdue. Right now there's pressure on the VA to put a pause on foreclosures while it gets that program running. John Bell says the VA is, quote, "considering all choices."BELL: We owe it to our veterans to make certain that we're giving them every chance to be able to remain in the home.ARNOLD: Ray and Becky Queen are hoping that the VA does put a time out on foreclosures, due to the fact that if the fire truck appears after the home burns down, it's not going to do much great for the countless veterans who need aid now.Chris Arnold, NPR News.
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