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Countless veterans deal with foreclosure and it's not their fault. The VA could assist

By Chris Arnold, Robert Benincasa
virtadpt.net
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 stated, "and my hands were shaking."

Queen resides on a small farm in rural Oklahoma with her other half, Ray, and their 2 young kids. Ray is a U.S. Army veteran who was wounded 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.

Today the VA has put this family on the verge of losing their home.

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

Like countless other Americans, the Queens took benefit of what's called a COVID mortgage forbearance, which permitted homeowners to avoid mortgage payments. It was established by Congress after the pandemic hit for people who lost income.

But an NPR examination has actually discovered that countless veterans who took a forbearance are now at danger of losing their homes through no fault of their own. And while the VA is dealing with a method to repair the issue, for many it might be too late.

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

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

So in 2015, with their savings decreasing, the couple states they called the company that manages their mortgage, Mr. Cooper, and were told 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 told, they would not owe the missed out on payments in a huge swelling sum.

"I really particularly asked 'how does this work?'" says 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 simply begin making their typical 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 property owners to do that. This happened although the mortgage industry, housing supporters and veterans groups all alerted the VA not to end the program, stating thousands of property owners required to capture up on missed payments. Interest rates had risen a lot that many could not afford to re-finance or get back on track any other way.

Ray Queen says nobody informed him about any of this.

"How does that happen?" Queen asked. "This is supposed to be a program that you all need to assist individuals in times of crisis, so you don't take their house from them."

The Queens say they attempted to come off their forbearance in February of this year and resume paying their mortgage. They were both working once again. But they encountered hold-ups with the mortgage business.

Then, in September, the couple says 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 statement it "checked out every possible opportunity to overcome an option for this customer." But it stated the VA needs better loss-mitigation alternatives and referred NPR to a letter from supporters, industry and veteran groups prompting the VA to reboot the PCP program.

The VA "has really let people down"

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

"The house owners participated in COVID forbearances, they were made specific pledges, and there were certain representations that were made," states Kelly. "And the VA essentially pulled the rug out from under everyone."

For some homeowners, ending the program may not suggest foreclosure, but it still a monetary difficulty.

"Many of these individuals have 2 or 3% interest rate loans," Kelly says. With the PCP program they could keep that interest rate. Today, she says, the only method they'll be able to conserve their home is to participate in a loan modification where the interest rate will be around today's market rate of 7.5%.

"For a lot of people, their payments will increase by $600 or $700 a month, due to the fact that the VA has actually chosen to end the partial claim program."

Many homeowners can't pay for such a big boost in their monthly payment.

According to the data company ICE Mortgage Technology, 6,000 house owners with VA loans who had COVID forbearances are presently in the foreclosure procedure. And 34,000 more are delinquent.

Kelly says most other house owners in America - individuals with FHA loans, for instance, or loans backed by Fannie Mae and Freddie Mac - still have ways to avoid 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 treated even worse than a lot of other homeowners, Kelly said.

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

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

The Department of Veterans Affairs says it had no option however 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 reality, have the authority to extend the program. But either way, it ended it.

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

NPR has learned that the VA is dealing with a brand-new program to change the old one. It will operate in a different way but to comparable impact, 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 wish for much of those 6,000 VA homeowners already in the foreclosure process. Not to discuss the many more who are overdue.

Already, information shows that more VA homeowners have been heading into foreclosure considering that 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 get here far too late?

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

"There must be a pause on foreclosures," says Steve Sharpe, a senior lawyer at the National Consumer Law Center. "Veterans must really be able to have an ability to gain access to this program when it comes online due to the fact that it's been so long considering that they've had something that will genuinely 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 sounds like a great concept to veteran Ray Queen in Oklahoma.

"Let us keep paying towards our regular mortgage between from time to time," he says. "Then when the VA has that repaired we can return and attend to the circumstance. That appears like the adult, mature thing to do, not put a household through hell."

NPR duplicated Ray Queen's plea to John Bell at the VA directly. Bell stated the VA is "exploring all choices at this moment in time."

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

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

"Without this pause, thousands of veterans and servicemembers could needlessly 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 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 pause on all VA loan foreclosures where customers are most likely to be eligible for VA's brand-new ... program until it is available and borrowers can be assessed to see if they qualify."

Ray and Becky Queen are hoping the VA does let people keep their homes till the brand-new program can offer them a way to get current on their mortgages. Because if the firetruck reveals up after your house has actually burned down, it's not going to do much helpful for the countless veterans and service members who require aid now.

Transcript

LEILA FADEL, HOST: An NPR examination has discovered that thousands of U.S. military service members and veterans might lose their homes through no fault of their own. As NPR's Chris Arnold reports, the Department of Veterans Affairs is working on a repair. But it might be too late.CHRIS ARNOLD, BYLINE: Ray and Becky Queen are revealing 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 states that he was injured by an improvised explosive device, or IED.RAY QUEEN: And simply so you're conscious, I have brain damage from my time in Iraq. So there's a great deal of different things that don't work the method they're expected to anymore. And my memory is not great.ARNOLD: For decades, the federal government's helped veterans like Queen to purchase homes through its VA loan program. Now the VA has actually put this household on the brink of losing their house.B QUEEN: This is the letter that my other half and I got the other day mentioning that they're beginning foreclosure proceedings.ARNOLD: What's happening is that like countless 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 individuals who lost earnings. When Becky's mother passed away of COVID, she had to take a prolonged leave from work and lost her job. In 2015, the couple states their mortgage company told them that they could avoid 6 months of payments while they got back on their feet and then simply begin paying their mortgage again.B QUEEN: I extremely particularly asked, how does this work? And they stated, 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 move to the back end of their loan term so they might resume their typical 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, although housing advocates and the mortgage market and veterans groups all alerted them not to end the program since countless house owners required to catch up on missed payments. Rate of interest, too, had actually risen so much that lots of could not manage to refinance or return on track any other way. Ray Queen states nobody informed him about any of this.R QUEEN: How does that happen? This is supposed to be a program that y' all have to assist people in times of crisis so you don't take their home from them.ARNOLD: The couple states in September, they were informed that they needed to come up with a substantial payment - upwards of $22,000, which they don't 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 consumer lawyer in Virginia who's hearing from a great deal of veterans who remain in the exact same boat.KELLY: The homeowners participated in COVID forbearances. They were made sure pledges, and the VA basically pulled the rug out from under everybody.ARNOLD: Kelly says for a lot of other house 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, but not if you have a VA loan. So she states veterans are being treated worse than many other homeowners.KELLY: Service members are going to lose their home, and for the majority of people, that's whatever 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 directs the VA's home lending division.JOHN BELL: We had a short-term authority for that specific program throughout COVID.ARNOLD: Some in the industry think the VA did in fact have the authority to extend the program. Now, though, NPR has actually learned that the VA is working on a new program to replace the old one, however that's still four or 5 months away - too wish for numerous of the 6,000 house owners with VA loans who remain in the foreclosure procedure. 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 alternatives."BELL: We owe it to our veterans to make sure that we're providing them every chance to be able to stay in the home.ARNOLD: Ray and Becky Queen are hoping that the VA does put a pause on foreclosures, since if the fire truck appears after your house burns down, it's not going to do much good for the countless veterans who require assistance now.Chris Arnold, NPR News.