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

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 resides on a little farm in rural Oklahoma with her husband, Ray, and their 2 young kids. Ray is a U.S. Army veteran who was injured in Iraq. Since the 1940s, the federal government has helped veterans like him buy homes through its VA loan program, run by the Department of Veterans Affairs.

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

“I didn’t do anything incorrect,” says Ray Queen. “The only thing I did was trust a company that I’m supposed to trust with my mortgage.”

Like countless other Americans, the Queens benefited from what’s called a COVID mortgage forbearance, which enabled property owners to avoid mortgage payments. It was established by Congress after the pandemic hit for individuals who lost earnings.

But an NPR investigation has found 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 working on a method to fix the issue, for lots of it could be far too late.

After NPR initially published this story, a group of 4 U.S. Senators sent 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 begun in September of 2021, when Becky’s mom died of COVID-19. She had to take a prolonged leave from work and lost her job.

So last year, with their savings diminishing, the couple says they called the business that handles their mortgage, Mr. Cooper, and were informed they could skip six months of payments. And as soon as they returned on their feet and might start paying once again, the couple says they were informed, they would not owe the missed payments in a huge lump sum.

“I very specifically 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 out on payments would be relocated to the back end of their loan term so they could just begin making their normal mortgage payment once again.

But that’s not how it worked out.

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 although the mortgage industry, housing advocates and veterans groups all cautioned the VA not to end the program, stating countless property owners required to capture up on missed payments. Rates of interest had actually increased so much that many couldn’t manage to refinance or get back on track any other method.

Ray Queen states nobody informed him about any of this.

“How does that take place?” 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 attempted 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 business.

Then, in September, the couple states they were told they needed to come up with more than $22,000, which they do not have, or either offer their home or get foreclosed on.

Their mortgage servicing business, Mr. Cooper, said in a declaration it “explored every possible opportunity to resolve an option for this consumer.” But it said the VA requires much better loss-mitigation choices 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,” states Kristi Kelly, a consumer lawyer in Virginia who states she is hearing from a lot of other veterans in the exact same scenario as Ray and Becky Queen.

“The house owners entered into COVID forbearances, they were ensured pledges, and there were certain representations that were made,” says Kelly. “And the VA essentially pulled the carpet out from under everyone.”

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

“A lot of these individuals have 2 or 3% interest rate loans,” Kelly says. With the PCP program they could keep that rate of interest. And now, she states, the only way they’ll be able to conserve their home is to participate in a loan adjustment 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 house owners can’t pay for such a huge boost in their month-to-month payment.

According to the information company 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 house owners in America - people with FHA loans, for example, or loans backed by Fannie Mae and Freddie Mac - still have methods to prevent foreclosure by moving missed payments to the back of the loan term.

But property owners with VA loans don’t, since the VA ended that program. So veterans are being treated even worse than most other property owners, Kelly said.

“Service members remain 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 strategy to help, however it might 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 particular program during 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 industry believe the VA did, in fact, 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 found out that the VA is dealing with a brand-new program to replace the old one. It will work in a various method however to similar effect, to conserve individuals from foreclosure. Bell says it’s going to take four to five months to get it up and running.

That’s too long for numerous of those 6,000 VA property owners currently in the foreclosure process. Not to mention the lots of more who are overdue.

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

Will the firetruck get here far too late?

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

“There should be a time out on foreclosures,” says Steve Sharpe, a senior lawyer at the National Consumer Law Center. “Veterans need to really be able to have an ability to access this program when it comes online since it’s been so long given that they have actually had something that will truly work.

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

Pausing foreclosures sounds like an excellent idea to veteran Ray Queen in Oklahoma.

“Let us keep paying towards our regular mortgage between now and then,” he states. “Then as soon as the VA has that repaired we can come back and address the situation. That appears like the adult, fully grown thing to do, not put a family through hell.”

NPR repeated Ray Queen’s plea to John Bell at the VA directly. Bell stated the VA is “checking out all alternatives at this moment in time.”

“We owe it to our veterans to ensure that we’re providing every chance to be able to stay in the home,” Bell said.

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

“Without this time out, thousands of veterans and servicemembers might 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 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 pause on all VA loan foreclosures where customers are likely to be eligible for VA’s brand-new … program until it is offered and debtors can be evaluated to see if they qualify.”

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

LEILA FADEL, HOST: An NPR investigation has actually discovered that countless 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 dealing with a repair. 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 house, he states that he was wounded by an improvised explosive device, or IED.RAY QUEEN: And so you know, I have brain damage from my time in Iraq. So there’s a great deal of various things that do not work the method they’re expected to any longer. And my memory is not great.ARNOLD: For years, the federal government’s assisted veterans like Queen to purchase homes through its VA loan program. Today the VA has put this household on the edge of losing their house.B QUEEN: This is the letter that my partner and I received yesterday mentioning that they’re beginning foreclosure proceedings.ARNOLD: What’s happening is that like countless other Americans, the Queens took advantage of what’s called a COVID mortgage forbearance. It was set up by Congress after the pandemic hit for individuals who lost income. When Becky’s mama died of COVID, she had to take a prolonged leave from work and lost her job. In 2015, the couple says their mortgage company informed them that they could skip six months of payments while they returned on their feet and then just begin paying their mortgage again.B QUEEN: I extremely 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 transfer 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 homeowners to do that, although housing supporters and the mortgage market and veterans groups all warned them not to end the program due to the fact that countless house owners required to capture up on missed out on payments. Rate of interest, too, had actually risen a lot that many couldn’t manage to refinance or get back on track any other method. Ray Queen states 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 help people in times of crisis so you do not take their home from them.ARNOLD: The couple says 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 home or get foreclosed on.B QUEEN: My heart dropped, and, like, my hands were shaking.KRISTI KELLY: The Department of Veterans Affairs has really let people down.ARNOLD: Kristi Kelly is a consumer lawyer in Virginia who’s hearing from a great deal of veterans who are in the exact same boat.KELLY: The house owners entered into COVID forbearances. They were made specific guarantees, and the VA essentially pulled the carpet out from under everybody.ARNOLD: Kelly states for most 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 prevent getting foreclosed on, however not if you have a VA loan. So she says veterans are being dealt with worse than a lot of other homeowners.KELLY: Service members are going to lose their home, and for the majority of people, 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 choice but to end the program. John Bell directs the VA’s home financing division.JOHN BELL: We had a short-term authority for that particular program throughout COVID.ARNOLD: Some in the industry think the VA did actually have the authority to extend the program. Now, though, NPR has found out that the VA is dealing with a new program to change the old one, however that’s still four or five months away - too wish for much of the 6,000 homeowners with VA loans who are in the foreclosure procedure. Not to discuss there’s 34,000 more who were delinquent. Today there’s pressure on the VA to put a time out on foreclosures while it gets that program running. John Bell states the VA is, quote, “considering all alternatives.“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 excellent for the countless veterans who need help now.Chris Arnold, NPR News.