roomsandhouses

Thousands of veterans face foreclosure and it's not their fault. The VA could assist
sacramentoneighbors.com
By Chris Arnold, Robert Benincasa
vegas-real-estate.org
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 said, "and my hands were shaking."

Queen survives on a little farm in rural Oklahoma with her spouse, Ray, and their two young kids. Ray is a U.S. Army veteran who was wounded in Iraq. Since the 1940s, the federal government has actually helped veterans like him buy 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 home.

"I didn't do anything wrong," 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 made the most 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 earnings.

But an NPR examination has actually found that countless veterans who took a forbearance are now at threat of losing their homes through no fault of their own. And while the VA is working on a way to repair the issue, for lots of it might be far too late.

After NPR initially published this story, a group of four 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 begun in September of 2021, when Becky's mom passed away of COVID-19. She needed to take an extended leave from work and lost her task.

So last year, with their savings diminishing, the couple says they called the business that manages their mortgage, Mr. Cooper, and were informed they could skip six months of payments. And when they returned on their feet and could begin paying again, the couple says they were informed, they wouldn't owe the missed out on payments in a huge swelling sum.

"I really specifically asked 'how does this work?'" states 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 allowed house owners to do that. This occurred despite the fact that the mortgage industry, housing supporters and veterans groups all cautioned the VA not to end the program, stating countless homeowners needed to capture up on missed payments. Rate of interest had risen so much that numerous couldn't afford to refinance or get back on track any other way.

Ray Queen states nobody informed him about any of this.

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

The Queens state 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 delays 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, stated in a declaration it "explored every possible opportunity to resolve an option for this client." But it stated the VA needs much better loss-mitigation choices and referred NPR to a letter from supporters, industry and veteran groups urging the VA to reboot the PCP program.

The VA "has really let individuals down"

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

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

For some property owners, ending the program might not indicate foreclosure, however it still means a financial hardship.

"A number of these individuals have 2 or 3% rates of interest loans," Kelly states. With the PCP program they might keep that rates of interest. And now, she states, the only way they'll have the ability to save 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 most individuals, 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 house owners can't manage such a substantial increase 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 presently in the foreclosure procedure. And 34,000 more are delinquent.

Kelly states most other house owners in America - individuals with FHA loans, for example, or loans backed by Fannie Mae and Freddie Mac - still have methods to prevent foreclosure by moving missed out on payments to the back of the loan term.

But house owners with VA loans do not, due to the fact that the VA ended that program. So veterans are being treated even worse than many other homeowners, Kelly said.

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

VA has a strategy 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 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 fact, have the authority to extend the program. But in either case, it ended it.

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

NPR has actually learned that the VA is dealing with a new program to change the old one. It will operate in a different way however to similar impact, to save people from foreclosure. Bell states it's going to take 4 to 5 months to get it up and running.

That's too long for a number of those 6,000 VA house owners currently in the foreclosure process. Not to mention the numerous more who are delinquent.

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

Will the firetruck get here too late?

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

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

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

Pausing foreclosures sounds like a great concept to veteran Ray Queen in Oklahoma.

"Let us keep paying towards our routine mortgage between from time to time," he states. "Then when the VA has that repaired we can come back and address the circumstance. That seems like the adult, fully grown 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 options at this point in time."

"We owe it to our veterans to make certain that we're offering 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 prompting them to put a hang on anymore foreclosures.

"Without this pause, countless veterans and servicemembers could needlessly 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 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 carry out an immediate pause on all VA loan foreclosures where debtors 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 qualify."

Ray and Becky Queen are hoping the VA does let individuals keep their homes till the brand-new program can offer them a method to get present on their mortgages. Because if the firetruck shows up after your home has actually burned down, it's not going to do much helpful for the countless veterans and service members who need help now.

Transcript

LEILA FADEL, HOST: An NPR examination has found 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 working on a repair. But it could 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 2 young kids. Ray served in Iraq in the Army. Inside their house, he states that he was wounded by an improvised explosive gadget, or IED.RAY QUEEN: And so you understand, I have brain damage from my time in Iraq. So there's a lot of different things that don't work the method they're supposed to any longer. And my memory is not great.ARNOLD: For years, the federal government's assisted veterans like Queen to buy homes through its VA loan program. But now the VA has put this family on the verge of losing their house.B QUEEN: This is the letter that my partner and I received the other day mentioning that they're starting 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 income. When Becky's mommy passed away of COVID, she had to take an extended leave from work and lost her job. Last year, the couple states their mortgage company told them that they could avoid 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 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 payments would relocate to the back end of their loan term so they could resume their typical 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, although housing advocates and the mortgage industry and veterans groups all alerted them not to end the program because countless house owners needed to capture up on missed out on payments. Rates of interest, too, had actually increased so much that lots of couldn't pay for to refinance or get back on track any other way. Ray Queen says nobody informed him about any of this.R QUEEN: How does that take place? This is supposed to be a program that y' all have to assist 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 needed to come up with a big payment - upwards of $22,000, which they don't 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 truly let people down.ARNOLD: Kristi Kelly is a customer legal representative in Virginia who's hearing from a great deal of veterans who are in the very same boat.KELLY: The house owners participated in COVID forbearances. They were made sure guarantees, and the VA essentially 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 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 states veterans are being treated even worse than most 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 says it had no option but to end the program. John Bell heads up the VA's home financing division.JOHN BELL: We had a short-term authority for that specific program during COVID.ARNOLD: Some in the market believe the VA did actually 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 4 or five months away - too wish for many of the 6,000 house owners with VA loans who remain in the foreclosure procedure. Not to mention there's 34,000 more who were overdue. 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, "thinking about all options."BELL: We owe it to our veterans to make certain that we're offering them 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, due to the fact that if the fire engine appears after your home burns down, it's not going to do much excellent for the countless veterans who require assistance now.Chris Arnold, NPR News.