Countless veterans deal with 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 notification.
"My heart dropped," she said, "and my hands were shaking."
Queen lives on a little farm in rural Oklahoma with her other half, 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 assisted veterans like him purchase homes through its VA loan program, run by the Department of Veterans Affairs.
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 business that I'm expected to trust with my mortgage."
Like countless other Americans, the Queens made the most of what's called a COVID mortgage forbearance, which enabled house owners to avoid mortgage payments. It was established by Congress after the pandemic hit for people who lost income.
But an NPR examination has discovered that thousands of 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 method to fix the issue, for many it might be too late.
After NPR initially released this story, a group of four U.S. Senators sent out 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 died of COVID-19. She needed to take a prolonged leave from work and lost her task.
So in 2015, with their cost savings dwindling, the couple states they called the company that manages their mortgage, Mr. Cooper, and were informed they might skip six months of payments. And once they returned on their feet and could start paying again, the couple states they were informed, they would not owe the missed payments in a huge lump 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 transferred to the back end of their loan term so they could simply start 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 took place despite the fact that the mortgage market, housing supporters and veterans groups all warned the VA not to end the program, saying countless homeowners required to capture up on missed out on payments. Interest rates had actually increased a lot that numerous could not pay for to re-finance or return 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 don't take their house from them."
The Queens say 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 encountered delays with the mortgage business.
Then, in September, the couple states they were informed they needed to come up with more than $22,000, which they do not have, or either sell their home or get foreclosed on.
Their mortgage servicing business, Mr. Cooper, said in a statement it "explored every possible opportunity to overcome a service for this consumer." But it said the VA needs much better loss-mitigation alternatives and referred NPR to a letter from advocates, market and veteran groups urging the VA to reboot the PCP program.
The VA "has truly let people down"
"The Department of Veterans Affairs has really let people down," says Kristi Kelly, a consumer lawyer in Virginia who says she is speaking with a great deal of other veterans in the exact same scenario as Ray and Becky Queen.
"The homeowners participated in COVID forbearances, they were made sure guarantees, and there were certain representations that were made," says Kelly. "And the VA basically pulled the rug out from under everybody."
For some homeowners, ending the program may not indicate foreclosure, but it still suggests a monetary challenge.
"A lot of these individuals have 2 or 3% rate of interest loans," Kelly says. With the PCP program they could keep that interest rate. Now, she says, the only method they'll be able to conserve their home is to get in into a loan modification where the interest rate will be around today's market rate of 7.5%.
"For a lot of people, 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 property owners can't afford such a huge boost in their monthly payment.
According to the information firm ICE Mortgage Technology, 6,000 house owners with VA loans who had COVID forbearances are presently in the foreclosure process. And 34,000 more are delinquent.
Kelly states most other property owners in America - people 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 house owners with VA loans don't, since the VA ended that program. So veterans are being treated worse than many other house owners, Kelly stated.
"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 remains in their homes."
VA has a plan to assist, but it might be 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 typical authority."
Some in the industry think the VA did, in truth, have the authority to extend the program. But either way, it ended it.
Now, though, the VA is taking the circumstance seriously.
NPR has actually discovered that the VA is working on a brand-new program to change the old one. It will operate in a different method but to similar effect, to conserve individuals from foreclosure. Bell states it's going to take 4 to 5 months to get it up and running.
That's too long for much of those 6,000 VA property owners already in the foreclosure procedure. Not to mention the many more who are delinquent.
Already, information shows that more VA house owners have actually been heading into foreclosure considering that 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 arrive far too late?
With many property 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 attorney at the National Consumer Law Center. "Veterans need to really be able to have a capability to access this program when it comes online since it's been so long since they've had something that will really work.
Sharpe states 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 once in a while," he says. "Then once the VA has that repaired we can come back and resolve the situation. That looks 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 directly. Bell said the VA is "exploring all choices at this point in time."
"We owe it to our veterans to make sure that we're providing them 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 urging them to put a hang on any more foreclosures.
"Without this time out, countless 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 new ... program up until it is available and borrowers can be evaluated to see if they certify."
Ray and Becky Queen are hoping the VA does let individuals keep their homes up until the new program can offer them a method to get existing on their mortgages. Because if the firetruck appears after the home has actually burned down, it's not going to do much great for the countless veterans and service members who require help now.
Transcript
LEILA FADEL, HOST: An NPR examination has 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 fix. But it might 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 injured 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 great deal of various 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 assisted veterans like Queen to purchase homes through its VA loan program. Today the VA has put this family on the brink of losing their house.B QUEEN: This is the letter that my spouse and I got the other day specifying that they're beginning foreclosure proceedings.ARNOLD: What's occurring is that like millions of 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 earnings. When Becky's mama passed away of COVID, she had to take a prolonged leave from work and lost her job. In 2015, the couple says their mortgage company told them that they could skip 6 months of payments while they got back on their feet and after that simply begin paying their mortgage again.B QUEEN: I really particularly 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 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 homeowners 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 house owners required to capture up on missed out on payments. Rate of interest, too, had increased so much that many could not manage to refinance 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 supposed to be a program that y' all need to help individuals in times of crisis so you do not take their home from them.ARNOLD: The couple says in September, they were informed that they needed to come up with a big 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 consumer attorney in Virginia who's hearing from a lot of veterans who remain in the same boat.KELLY: The house owners participated in COVID forbearances. They were ensured promises, and the VA essentially pulled the carpet 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 most other homeowners.KELLY: Service members are going to lose their home, and for a lot of individuals, 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 however 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 during COVID.ARNOLD: Some in the market think the VA did really have the authority to extend the program. Now, however, NPR has actually learned that the VA is dealing with a new program to change the old one, however that's still 4 or 5 months away - too long for much of the 6,000 homeowners with VA loans who are in the foreclosure process. Not to discuss there's 34,000 more who were overdue. Today there's pressure on the VA to put a time out on foreclosures while it gets that program running. John Bell says the VA is, quote, "thinking about all choices."BELL: We owe it to our veterans to make sure that we're providing every opportunity to be able to stay 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 reveals up after your house burns down, it's not going to do much helpful for the thousands of veterans who need aid now.Chris Arnold, NPR News.
