Countless veterans deal with foreclosure and it's not their fault. The VA could help
By Chris Arnold, Robert Benincasa
Updated Thursday, November 16, 2023 • 9:53 AM EST
Heard on Morning Edition
Becky Queen remembers opening the letter with the foreclosure notification.
"My heart dropped," she said, "and my hands were shaking."
Queen survives on a small farm in rural Oklahoma with her partner, 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 helped veterans like him buy homes through its VA loan program, run by the Department of Veterans Affairs.
And now the VA has actually put this household on the brink of losing their house.
"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 millions of other Americans, the Queens made the most of what's called a COVID mortgage forbearance, which enabled property owners to avoid mortgage payments. It was set up by Congress after the pandemic hit for people who lost income.
But an NPR investigation has discovered that thousands of veterans who took a forbearance are now at risk of losing their homes through no fault of their own. And while the VA is working on a way to repair the problem, for many it could be too late.
After NPR initially released 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 unclear 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 needed to take an extended leave from work and lost her job.
So last year, with their cost savings decreasing, the couple states they called the company that manages their mortgage, Mr. Cooper, and were told they could avoid 6 months of payments. And when they returned on their feet and might start paying again, the couple states they were told, they would not owe the missed payments in a big swelling sum.
"I really specifically 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 relocated to the back end of their loan term so they might 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 allowed homeowners to do that. This occurred although the mortgage industry, housing advocates and veterans groups all alerted the VA not to end the program, stating countless homeowners required to catch up on missed payments. Rates of interest had actually risen so much that many could not afford to re-finance or return on track any other way.
Ray Queen says no one informed him about any of this.
"How does that occur?" Queen asked. "This is expected to be a program that you all need to help individuals in times of crisis, so you do not take their home 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 told they required to come up with more than $22,000, which they don't have, or either offer their home or get foreclosed on.
Their mortgage servicing business, Mr. Cooper, said in a statement 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, market and veteran groups prompting the VA to restart the PCP program.
The VA "has truly let people down"
"The Department of Veterans Affairs has truly let people down," says Kristi Kelly, a customer attorney in Virginia who states she is hearing from a lot of other veterans in the exact same situation as Ray and Becky Queen.
"The property owners participated in COVID forbearances, they were made sure pledges, and there were certain representations that were made," says Kelly. "And the VA essentially pulled the rug out from under everybody."
For some property owners, ending the program might not suggest foreclosure, but it still implies a financial challenge.
"A number of these people have 2 or 3% rates of interest loans," Kelly states. With the PCP program they could keep that interest rate. Now, she states, the only method they'll be able 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 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 property owners can't afford such a huge increase in their monthly payment.
According to the data company ICE Mortgage Technology, 6,000 homeowners with VA loans who had actually COVID forbearances are presently in the foreclosure procedure. And 34,000 more are delinquent.
Kelly states most other homeowners in America - people with FHA loans, for circumstances, or loans backed by Fannie Mae and Freddie Mac - still have ways to prevent foreclosure by moving missed out on payments to the back of the loan term.
But homeowners with VA loans don't, since the VA ended that program. So veterans are being dealt with worse than a lot of other homeowners, Kelly stated.
"Service members are 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 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 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 market 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 situation seriously.
NPR has found out that the VA is dealing with a new program to change the old one. It will work in a different method but to comparable impact, to conserve people from foreclosure. Bell states it's going to take 4 to five months to get it up and running.
That's too wish for many of those 6,000 VA property owners currently in the foreclosure procedure. Not to point out the numerous more who are overdue.
Already, information shows 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 get here far too late?
With numerous property owners at danger, there's growing pressure on the VA to stop foreclosing on veterans until it gets its fix up and running.
"There must be a pause on foreclosures," states Steve Sharpe, a senior attorney at the National Consumer Law Center. "Veterans should truly be able to have a capability to access this program when it comes online because it's been so long given that they've had something that will truly work.
Sharpe states the VA might likewise restart the PCP program that it shut down. "They have the authority to do both," he states.
Pausing foreclosures seems like a great concept to veteran Ray Queen in Oklahoma.
"Let us keep paying towards our routine mortgage between from time to time," he says. "Then as soon as the VA has actually that repaired we can come back and attend to the situation. That looks 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 straight. Bell stated the VA is "exploring 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 stay in the home," Bell stated.
Wednesday, a group of U.S. Senators sent a letter to the VA advising them to put a hang on any more foreclosures.
"Without this time out, countless veterans and servicemembers could 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 instant time out on all VA loan foreclosures where borrowers are most likely to be eligible for VA's brand-new ... program up until it is readily available and customers can be examined to see if they certify."
Ray and Becky Queen are hoping the VA does let people keep their homes till the new program can offer them a way to get existing on their mortgages. Because if the firetruck appears after your home has actually burned down, it's not going to do much great for the countless veterans and service members who need aid now.
Transcript
LEILA FADEL, HOST: An NPR investigation has actually 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 two young kids. Ray served in Iraq in the Army. Inside their house, he says that he was wounded by an improvised explosive gadget, or IED.RAY QUEEN: And so you're mindful, I have brain damage from my time in Iraq. So there's a lot of various things that do not work the way they're expected to anymore. 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. And now the VA has actually 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 specifying that they're starting foreclosure proceedings.ARNOLD: What's taking place 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 mom died of COVID, she needed to take a prolonged leave from work and lost her task. Last year, the couple says their mortgage business told them that they could skip six months of payments while they got back on their feet and after that simply start paying their mortgage again.B QUEEN: I really 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 out on payments would relocate to the back end of their loan term so they might resume their regular mortgage payment. But that is not how it worked out, due to the fact that 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 industry and veterans groups all warned them not to end the program since thousands of property owners required to capture up on missed out on payments. Rates of interest, too, had risen a lot that lots of couldn't pay for to re-finance or get back on track any other method. Ray Queen says nobody told him about any of this.R QUEEN: How does that take place? This is expected to be a program that y' all need to help people in times of crisis so you don't take their house from them.ARNOLD: The couple states in September, they were told that they needed to come up with a substantial payment - upwards of $22,000, which they do not 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 really let people down.ARNOLD: Kristi Kelly is a customer lawyer in Virginia who's hearing from a lot of veterans who are in the exact same boat.KELLY: The house owners participated in COVID forbearances. They were ensured guarantees, and the VA essentially pulled the rug 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 prevent getting foreclosed on, but not if you have a VA loan. So she says veterans are being dealt with even worse than many other homeowners.KELLY: Service members are going to lose their home, and for the majority of individuals, that's whatever they work for and all their wealth, are 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 loaning division.JOHN BELL: We had a short-term authority for that specific program during COVID.ARNOLD: Some in the market think the VA did in fact have the authority to extend the program. Now, though, NPR has actually found out that the VA is working on a new program to replace the old one, but that's still 4 or five months away - too wish 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. 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, "thinking about all alternatives."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 pause on foreclosures, due to the fact that if the fire truck shows up after your home burns down, it's not going to do much excellent for the countless veterans who need assistance now.Chris Arnold, NPR News.
