rsw-haus

Countless veterans face foreclosure and it's not their fault. The VA might assist

By Chris Arnold, Robert Benincasa

Updated Thursday, November 16, 2023 • 9:53 AM EST

Heard on Morning Edition

Becky Queen remembers opening the letter with the foreclosure notification.

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

Queen lives on a small farm in rural Oklahoma with her partner, 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 actually helped veterans like him purchase homes through its VA loan program, run by the Department of Veterans Affairs.

Today the VA has actually put this household on the brink of losing their house.

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

Like millions of other Americans, the Queens made the most of what's called a COVID mortgage forbearance, which allowed house owners to avoid mortgage payments. It was established by Congress after the pandemic hit for individuals who lost earnings.

But an NPR examination has discovered that thousands of veterans who took a forbearance are now at risk of losing their homes through no fault of their own. And while the VA is dealing with a method to fix the problem, for many it could be far too late.

After NPR at first published this story, a group of 4 U.S. Senators sent out a letter to the VA asking it to instantly stop foreclosing on the homes of veterans and servicemembers. It's uncertain if the VA will do that.

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

So in 2015, with their savings diminishing, the couple says they called the business that handles their mortgage, Mr. Cooper, and were told they might avoid 6 months of payments. And when they got back on their feet and might begin paying once again, the couple says they were informed, they wouldn't owe the missed payments in a big swelling sum.

"I very specifically asked 'how does this work?'" states Becky Queen. "They said 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 moved to the back end of their loan term so they could just begin making their regular 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 made it possible for homeowners to do that. This happened despite the fact that the mortgage industry, housing supporters and veterans groups all warned the VA not to end the program, saying countless homeowners needed to capture up on missed payments. Rates of interest had risen so much that numerous could not afford to refinance or return on track any other way.

Ray Queen states nobody informed him about any of this.

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

The Queens state they attempted to come off their forbearance in February of this year and resume paying their . They were both working once again. But they encountered 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 offer their house or get foreclosed on.

Their mortgage servicing business, Mr. Cooper, said in a statement it "explored every possible avenue to resolve a solution for this consumer." But it stated the VA needs much better loss-mitigation choices and referred NPR to a letter from advocates, industry and veteran groups advising the VA to restart the PCP program.

The VA "has truly let individuals down"

"The Department of Veterans Affairs has actually let people down," states Kristi Kelly, a consumer legal representative in Virginia who says she is hearing from a great deal of other veterans in the very same situation as Ray and Becky Queen.

"The house owners got in into COVID forbearances, they were made sure guarantees, and there were specific representations that were made," says Kelly. "And the VA essentially pulled the rug out from under everybody."

For some house owners, ending the program may not indicate foreclosure, however it still suggests a monetary difficulty.

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

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

Many house owners can't afford such a substantial boost in their month-to-month payment.

According to the information firm ICE Mortgage Technology, 6,000 property owners with VA loans who had actually COVID forbearances are presently in the foreclosure procedure. And 34,000 more are overdue.

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

But house owners with VA loans don't, since the VA ended that program. So veterans are being dealt with worse than the majority of other homeowners, Kelly stated.

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

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

The Department of Veterans Affairs says it had no choice however to end the program.

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

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

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

NPR has actually learned that the VA is dealing with a new program to replace the old one. It will operate in a different method however to similar effect, to conserve individuals from foreclosure. Bell says it's going to take four to 5 months to get it up and running.

That's too wish for a number of those 6,000 VA homeowners currently in the foreclosure procedure. Not to mention the many more who are overdue.

Already, data shows that more VA homeowners have been heading into foreclosure given that the VA ended its PCP program. The exact same is not true for FHA loans or loans backed by Fannie Mae or Freddie Mac.

Will the firetruck show up too late?

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

"There need to be a pause on foreclosures," states Steve Sharpe, a senior attorney at the National Consumer Law Center. "Veterans should actually have the ability to have a capability to gain access to this program when it comes online due to the fact that it's been so long because they have actually had something that will really work.

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

Pausing foreclosures seems like a good idea to veteran Ray Queen in Oklahoma.

"Let us keep paying towards our regular mortgage in between once in a while," he states. "Then once the VA has that fixed we can come back and address the circumstance. That looks like the adult, mature thing to do, not put a family through hell."

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

"We owe it to our veterans to ensure that we're providing them every opportunity to be able to remain in the home," Bell stated.

Wednesday, a group of U.S. Senators sent a letter to the VA prompting them to put a hold on any more foreclosures.

"Without this pause, thousands of veterans and servicemembers could unnecessarily lose their homes," Sens. Sherrod Brown, Jon Tester, Jack Reed, and Tim Kaine, all Democrats, composed in a letter to VA Secretary Denis McDonough. "This was never ever 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 readily available and debtors can be examined to see if they qualify."

Ray and Becky Queen are hoping the VA does let individuals keep their homes until the new program can provide them a method to get present on their mortgages. Because if the firetruck reveals up after your house has burned down, it's not going to do much helpful for the thousands of veterans and service members who require help now.
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Transcript

LEILA FADEL, HOST: An NPR investigation has actually 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 two young kids. Ray served in Iraq in the Army. Inside their house, he says that he was injured by an improvised explosive device, or IED.RAY QUEEN: And simply so you're mindful, I have brain damage from my time in Iraq. So there's a great deal of various things that do not work the way they're supposed to any longer. And my memory is not great.ARNOLD: For years, the federal government's helped veterans like Queen to purchase homes through its VA loan program. Today the VA has actually put this family on the brink of losing their house.B QUEEN: This is the letter that my husband and I received yesterday stating that they're beginning foreclosure proceedings.ARNOLD: What's happening is that like countless other Americans, the Queens benefited from 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 an extended leave from work and lost her job. Last year, the couple says their mortgage company informed them that they could avoid 6 months of payments while they returned on their feet and after that simply start paying their mortgage again.B QUEEN: I extremely particularly 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 payments would transfer to the back end of their loan term so they could resume their normal mortgage payment. But that is not how it exercised, due to the fact that a year ago in October, the Department of Veterans Affairs ended the program that enabled property owners to do that, even though housing supporters and the mortgage market and veterans groups all alerted them not to end the program because countless homeowners required to catch up on missed out on payments. Rates of interest, too, had actually risen a lot that lots of could not afford to re-finance or return on track any other method. Ray Queen says no one told him about any of this.R QUEEN: How does that occur? This is expected to be a program that y' all have to help individuals in times of crisis so you do not take their house from them.ARNOLD: The couple states in September, they were told that they required to come up with a substantial payment - upwards of $22,000, which they do not have - or sell their house or get foreclosed on.B QUEEN: My heart dropped, and, like, my hands were shaking.KRISTI KELLY: The Department of Veterans Affairs has actually let individuals down.ARNOLD: Kristi Kelly is a customer legal representative in Virginia who's hearing from a great deal of veterans who remain in the same boat.KELLY: The homeowners participated in COVID forbearances. They were made sure promises, and the VA essentially pulled the carpet out from under everybody.ARNOLD: Kelly says for the majority of other house owners in America, there are still methods to move your missed 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 states veterans are being dealt with worse than many other homeowners.KELLY: Service members are going to lose their home, and for many people, that's everything they work for and all their wealth, remain in their homes.ARNOLD: For its part, the Department of Veterans Affairs says it had no option but to end the program. John Bell directs the VA's home loaning division.JOHN BELL: We had a short-term authority for that particular program throughout COVID.ARNOLD: Some in the industry believe the VA did in fact have the authority to extend the program. Now, though, NPR has found out that the VA is dealing with a brand-new program to replace the old one, however that's still 4 or 5 months away - too long for much of the 6,000 house owners with VA loans who remain in the foreclosure process. Not to discuss there's 34,000 more who were delinquent. Right now there's pressure on the VA to put a time out 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 sure that we're providing 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, because if the fire engine appears after your home burns down, it's not going to do much great for the thousands of veterans who require assistance now.Chris Arnold, NPR News.