leasingangels

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

By Chris Arnold, Robert Benincasa

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

Heard on Morning Edition

Becky Queen keeps in mind opening the letter with the foreclosure notice.

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

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

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

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

Like countless other Americans, the Queens took advantage 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 investigation has actually discovered 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 dealing with a way to repair the issue, for numerous it could be too late.

After NPR at first released this story, a group of 4 U.S. Senators sent 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 started in September of 2021, when Becky's mother passed away of COVID-19. She had to take a prolonged 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 told they could skip six 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 wouldn't owe the missed payments in a big swelling sum.

"I extremely particularly 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 out on payments would be relocated to the back end of their loan term so they could simply begin making their regular mortgage payment once 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 enabled house owners to do that. This took place despite the fact that the mortgage industry, housing supporters and veterans groups all cautioned the VA not to end the program, saying countless house owners required to capture up on missed out on payments. Rates of interest had increased a lot that many couldn't afford to re-finance or get back on track any other way.

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

"How does that occur?" Queen asked. "This is supposed to be a program that you all need to help people in times of crisis, so you don't take their home from them."
ask.com
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 encountered delays with the mortgage company.

Then, in September, the couple says they were told they needed to come up with more than $22,000, which they do not 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 work through an option for this customer." But it stated the VA needs much better loss-mitigation options and referred NPR to a letter from supporters, market and veteran groups advising the VA to restart the PCP program.

The VA "has really let people down"

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

"The homeowners participated in COVID forbearances, they were made certain promises, and there were certain representations that were made," says Kelly. "And the VA basically pulled the rug out from under everyone."

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

"Much of these people have 2 or 3% rates of interest loans," Kelly states. With the PCP program they might keep that rate of interest. Today, she states, the only method they'll have the ability to save their home is to enter into a loan adjustment where the interest rate will be around today's market rate of 7.5%.

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

Many homeowners can't manage such a huge boost in their monthly payment.

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

Kelly states most other homeowners in America - individuals 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 property owners with VA loans do not, since the VA ended that program. So veterans are being dealt with worse than most other house owners, Kelly said.

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

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

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

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

Some in the industry believe the VA did, in reality, 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 actually discovered that the VA is dealing with a new program to change the old one. It will operate in a different way but to comparable impact, to save individuals from foreclosure. Bell states it's going to take four to five months to get it up and running.

That's too wish for a number of those 6,000 VA house owners already in the foreclosure process. Not to point out the numerous more who are overdue.

Already, information reveals that more VA house owners have actually 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 get here far too late?

With a lot of property owners at threat, there's growing pressure on the VA to stop foreclosing on till it gets its repair up and running.

"There need to be a pause on foreclosures," states Steve Sharpe, a senior lawyer at the National Consumer Law Center. "Veterans ought to actually have the ability to have an ability to gain access to this program when it comes online since it's been so long given that they've had something that will really work.

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

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

"Let us keep paying towards our routine mortgage in between from time to time," he says. "Then when the VA has actually that fixed we can come back and resolve the circumstance. That seems 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 said the VA is "exploring all alternatives at this point in time."

"We owe it to our veterans to ensure that we're offering them every chance to be able to remain in the home," Bell said.
questionsanswered.net
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, wrote 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 execute an instant pause on all VA loan foreclosures where customers are most likely to be eligible for VA's brand-new ... program till it is offered and borrowers can be examined to see if they certify."

Ray and Becky Queen are hoping the VA does let individuals keep their homes up until the brand-new program can provide them a method to get current on their mortgages. Because if the firetruck shows up after the house has 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 actually found 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 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 house, 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 great deal of different things that do not work the method they're supposed to any longer. And my memory is not great.ARNOLD: For decades, the federal government's helped veterans like Queen to buy homes through its VA loan program. Now the VA has put this family on the edge of losing their house.B QUEEN: This is the letter that my partner and I received the other day stating 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 set up by Congress after the pandemic hit for individuals who lost earnings. When Becky's mommy passed away of COVID, she needed to take a prolonged leave from work and lost her job. Last year, the couple says their mortgage business informed them that they could avoid 6 months of payments while they got back on their feet and then just begin paying their mortgage again.B QUEEN: I really 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 payments would transfer to the back end of their loan term so they could 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 made it possible for house owners to do that, despite the fact that housing supporters and the mortgage market and veterans groups all cautioned them not to end the program because countless homeowners needed to catch up on missed payments. Rate of interest, too, had risen a lot that numerous could not pay for to re-finance or get back on track any other way. Ray Queen states nobody informed 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 people in times of crisis so you don't take their house from them.ARNOLD: The couple states in September, they were informed that they required to come up with a huge payment - upwards of $22,000, which they don't have - or offer 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 customer attorney in Virginia who's hearing from a lot of veterans who are in the same boat.KELLY: The house owners got in into COVID forbearances. They were made particular 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 ways to move your missed 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 says veterans are being treated even worse than the majority of other homeowners.KELLY: Service members are going to lose their home, and for most 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 but to end the program. John Bell heads up the VA's home lending division.JOHN BELL: We had a short-term authority for that specific program throughout COVID.ARNOLD: Some in the market believe the VA did really have the authority to extend the program. Now, however, NPR has actually discovered that the VA is working on a brand-new program to change the old one, but that's still four or 5 months away - too long for a lot of the 6,000 property owners with VA loans who are in the foreclosure process. Not to point out there's 34,000 more who were delinquent. Right now there's pressure on the VA to put a pause on foreclosures while it gets that program running. John Bell states the VA is, quote, "considering all choices."BELL: We owe it to our veterans to make sure that we're providing 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 engine appears after the house burns down, it's not going to do much helpful for the thousands of veterans who need assistance now.Chris Arnold, NPR News.