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

By Chris Arnold, Robert Benincasa
siol.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 survives on a small farm in rural Oklahoma with her husband, 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 actually assisted veterans like him buy homes through its VA loan program, run by the Department of Veterans Affairs.

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

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

Like millions of other Americans, the Queens took advantage of what's called a COVID mortgage forbearance, which permitted property owners to avoid mortgage payments. It was established by Congress after the pandemic hit for individuals who lost income.

But an NPR investigation has discovered that countless 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 repair the problem, for many it could 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 immediately 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 died of COVID-19. She had to take a prolonged leave from work and lost her task.

So in 2015, with their savings dwindling, the couple states they called the business that handles their mortgage, Mr. Cooper, and were informed they could avoid 6 months of payments. And once they got back on their feet and could start paying again, the couple states they were told, they wouldn't owe the missed out on payments in a big lump sum.

"I really 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 payments would be transferred to the back end of their loan term so they might simply begin making their typical 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 allowed property owners to do that. This took place despite the fact that the mortgage market, housing advocates and veterans groups all cautioned the VA not to end the program, stating countless property owners needed to capture up on missed out on payments. Rates of interest had increased so much that numerous could not afford to re-finance or return on track any other method.

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 have to assist people in times of crisis, so you don't take their home from them."

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

Then, in September, the couple states they were informed they required to come up with more than $22,000, which they do not have, or either sell their house or get foreclosed on.

Their mortgage servicing company, Mr. Cooper, said in a statement it "explored every possible avenue to resolve a service for this client." But it stated the VA requires much better loss-mitigation choices and referred NPR to a letter from supporters, industry and veteran groups prompting the VA to restart the PCP program.

The VA "has really let individuals down"

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

"The property owners got in into COVID forbearances, they were ensured guarantees, and there were specific representations that were made," says Kelly. "And the VA basically pulled the rug out from under everyone."

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

"Many of these individuals have 2 or 3% rate of interest loans," Kelly states. With the PCP program they might keep that rate of interest. Now, she states, the only method 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, due to the fact that the VA has actually chosen to end the partial claim program."

Many property 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 house owners with VA loans who had actually COVID forbearances are currently in the foreclosure procedure. And 34,000 more are delinquent.

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

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

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

The of Veterans Affairs says it had no option but 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 typical authority."

Some in the industry believe the VA did, in truth, 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 found out that the VA is dealing with a brand-new program to change the old one. It will operate in a various method however to comparable impact, to conserve people from foreclosure. Bell states it's going to take four to 5 months to get it up and running.

That's too long for a lot of those 6,000 VA homeowners already in the foreclosure process. Not to mention the lots of more who are delinquent.

Already, information reveals that more VA homeowners have actually been heading into foreclosure considering that the VA ended its PCP program. The 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 a lot of house owners at threat, there's growing pressure on the VA to stop foreclosing on veterans until it gets its spruce up and running.

"There must be a pause on foreclosures," states Steve Sharpe, a senior lawyer at the National Consumer Law Center. "Veterans should really be able to have a capability to access this program when it comes online since it's been so long since they have actually had something that will genuinely work.

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

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

"Let us keep paying towards our regular mortgage between now and then," he says. "Then once the VA has that fixed we can return and deal with the scenario. That appears 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 alternatives at this point in time."

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

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

"Without this time out, thousands of veterans and servicemembers might 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 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 till it is available and debtors can be examined to see if they certify."

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

Transcript

LEILA FADEL, HOST: An NPR investigation has discovered that thousands of 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 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 home, he states that he was injured by an improvised explosive gadget, or IED.RAY QUEEN: And just 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 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. But now the VA has actually put this household on the brink of losing their house.B QUEEN: This is the letter that my partner and I got the other day stating that they're starting foreclosure proceedings.ARNOLD: What's taking place 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 individuals who lost earnings. When Becky's mom passed away of COVID, she needed to take a prolonged leave from work and lost her job. In 2015, the couple states their mortgage company told them that they could skip 6 months of payments while they returned on their feet and then just begin paying their mortgage again.B QUEEN: I very 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 might resume their typical mortgage payment. But that is not how it worked out, since a year ago in October, the Department of Veterans Affairs ended the program that made it possible for property owners to do that, despite the fact that housing supporters and the mortgage market and veterans groups all alerted them not to end the program due to the fact that countless house owners required to capture up on missed out on payments. Interest rates, too, had increased so much that numerous couldn't pay for to refinance or get back on track any other method. Ray Queen says nobody informed him about any of this.R QUEEN: How does that occur? This is supposed 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 says in September, they were told that they needed to come up with a huge payment - upwards of $22,000, which they do not have - or offer 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 really let individuals down.ARNOLD: Kristi Kelly is a customer legal representative in Virginia who's hearing from a lot of veterans who remain in the exact same boat.KELLY: The property owners got in into COVID forbearances. They were made specific pledges, and the VA basically pulled the carpet out from under everybody.ARNOLD: Kelly says for most 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 states veterans are being dealt with worse than a lot of 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 states it had no choice however 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 market 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 change the old one, however that's still four or five months away - too wish for a number 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. Today 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 ensure that we're providing every opportunity 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, since if the fire engine shows up after your house burns down, it's not going to do much helpful for the thousands of veterans who need help now.Chris Arnold, NPR News.
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