aws-properties

Thousands of 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 stated, "and my hands were shaking."

Queen lives 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 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.

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

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

Like countless other Americans, the Queens took benefit of what's called a COVID mortgage forbearance, which allowed house owners to avoid mortgage payments. It was set up by Congress after the pandemic hit for individuals who lost income.

But an NPR investigation has actually found 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 working on a way to fix 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 instantly 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 needed to take an extended leave from work and lost her job.

So in 2015, with their savings decreasing, the couple states they called the company that handles their mortgage, Mr. Cooper, and were told they could avoid six months of payments. And as soon as they returned on their feet and might start paying again, the couple says they were told, they wouldn't owe the missed payments in a big swelling sum.

"I extremely specifically asked 'how does this work?'" says 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 out on payments would be transferred to the back end of their loan term so they could just start making their regular 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 property owners to do that. This happened although the mortgage industry, housing advocates and veterans groups all alerted the VA not to end the program, saying thousands of property owners needed to catch up on missed payments. Rate of interest had actually increased so much that lots of could not manage to refinance or return on track any other method.

Ray Queen says no one told him about any of this.

"How does that take place?" 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 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 once again. But they ran into delays with the mortgage business.

Then, in September, the couple says they were told they needed to come up with more than $22,000, which they don't 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 resolve a solution for this client." But it said the VA requires better loss-mitigation alternatives and referred NPR to a letter from advocates, market 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," says Kristi Kelly, a consumer legal representative in Virginia who states she is speaking with a lot of other veterans in the very same scenario as Ray and Becky Queen.

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

For some property owners, ending the program may not indicate foreclosure, however it still means a monetary challenge.

"A number of these people have 2 or 3% rate of interest loans," Kelly states. With the PCP program they could keep that interest rate. Today, she states, the only way they'll have the ability to save their home is to get in into a loan adjustment where the rate of interest will be around today's market rate of 7.5%.

"For the majority of people, their payments will increase by $600 or $700 a month, because the VA has actually chosen to end the partial claim program."

Many house owners can't manage such a huge increase in their monthly 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 process. And 34,000 more are delinquent.

Kelly says most other property owners in America - people with FHA loans, for circumstances, 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 homeowners with VA loans don't, because the VA ended that program. So veterans are being dealt with worse than the majority of other house owners, Kelly stated.

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

VA has a strategy to assist, but it might be too late

The Department of Veterans Affairs says it had no choice but to end the program.

"We had a short-term authority for that particular 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, though, the VA is taking the situation seriously.

NPR has found out that the VA is working on a new program to change the old one. It will work in a different method but to similar result, to conserve people from foreclosure. Bell says 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 property owners currently in the foreclosure process. Not to point out the lots of more who are delinquent.

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

"There must be a time out on foreclosures," states Steve Sharpe, a senior lawyer at the National Consumer Law Center. "Veterans need to truly be able to have an ability to access this program when it comes online because it's been so long since they've had something that will really work.

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

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

"Let us keep paying towards our regular mortgage in between from time to time," he says. "Then as soon as the VA has that repaired we can come back and deal with the scenario. That appears like the adult, mature 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 "checking out all options at this point in time."

"We owe it to our veterans to make sure that we're giving them every opportunity to be able to remain in the home," Bell stated.

Wednesday, a group of U.S. Senators sent out a letter to the VA urging them to put a hold on anymore foreclosures.

"Without this pause, thousands of veterans and servicemembers might unnecessarily 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 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 carry out an immediate pause on all VA loan foreclosures where are most likely to be qualified for VA's new ... program up until it is available and debtors can be assessed to see if they qualify."

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

LEILA FADEL, HOST: An NPR investigation has found 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 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 two young kids. Ray served in Iraq in the Army. Inside their house, he says that he was wounded by an improvised explosive device, or IED.RAY QUEEN: And so you understand, I have mental retardation from my time in Iraq. So there's a great deal of different things that do not 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 buy homes through its VA loan program. Today the VA has actually put this household on the edge of losing their house.B QUEEN: This is the letter that my hubby and I received the other day stating that they're beginning foreclosure proceedings.ARNOLD: What's occurring is that like millions of other Americans, the Queens took benefit of what's called a COVID mortgage forbearance. It was established by Congress after the pandemic hit for people who lost income. When Becky's mother passed away of COVID, she needed to take a prolonged leave from work and lost her task. In 2015, the couple says their mortgage company informed them that they could avoid 6 months of payments while they returned on their feet and after that just begin 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 payments would relocate to the back end of their loan term so they could 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 house owners to do that, although housing supporters and the mortgage industry and veterans groups all cautioned them not to end the program since thousands of house owners needed to catch up on missed out on payments. Rate of interest, too, had risen so much that many could not manage to re-finance or return on track any other method. Ray Queen states 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 people in times of crisis so you do not take their house from them.ARNOLD: The couple states in September, they were informed 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 individuals down.ARNOLD: Kristi Kelly is a consumer lawyer in Virginia who's hearing from a great deal of veterans who are in the same boat.KELLY: The property owners participated in COVID forbearances. They were made sure promises, and the VA essentially pulled the carpet out from under everybody.ARNOLD: Kelly says for the majority of other homeowners in America, there are still ways 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 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 states it had no option however to end the program. John Bell directs the VA's home lending division.JOHN BELL: We had a short-term authority for that specific program throughout COVID.ARNOLD: Some in the industry think the VA did really have the authority to extend the program. Now, however, NPR has actually discovered that the VA is dealing with a new program to replace the old one, but that's still 4 or five months away - too wish for numerous of the 6,000 property owners with VA loans who remain in the foreclosure process. Not to discuss there's 34,000 more who were delinquent. Right now 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 alternatives."BELL: We owe it to our veterans to ensure that we're providing 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, since if the fire engine shows up after your house burns down, it's not going to do much helpful for the countless veterans who need assistance now.Chris Arnold, NPR News.