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Thousands of veterans deal with foreclosure and it's not their fault. The VA might assist
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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 lives on a little farm in with her hubby, 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.

And now the VA has put this family on the brink 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 expected to trust with my mortgage."

Like millions of other Americans, the Queens took benefit of what's called a COVID mortgage forbearance, which permitted homeowners to skip mortgage payments. It was established by Congress after the pandemic hit for individuals who lost earnings.

But an NPR examination has found that countless veterans who took a forbearance are now at danger 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 might be too late.

After NPR initially published 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 mother died of COVID-19. She had to take an extended leave from work and lost her task.

So last year, with their savings decreasing, the couple states they called the business that handles their mortgage, Mr. Cooper, and were informed they might avoid 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 swelling amount.

"I very particularly asked 'how does this work?'" says 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 payments would be transferred to the back end of their loan term so they could just begin making their normal mortgage payment 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 enabled homeowners to do that. This took place even though the mortgage industry, housing supporters and veterans groups all alerted the VA not to end the program, saying thousands of homeowners needed to capture up on missed out on payments. Rate of interest had risen a lot that many couldn't afford to re-finance or return on track any other method.

Ray Queen states 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 assist people 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 ran into hold-ups with the mortgage company.

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

Their mortgage servicing company, Mr. Cooper, said in a declaration it "checked out every possible opportunity to resolve a solution for this consumer." But it said the VA needs much better loss-mitigation options and referred NPR to a letter from supporters, market and veteran groups advising the VA to reboot the PCP program.

The VA "has actually let individuals down"

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

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

For some homeowners, ending the program might not mean foreclosure, however it still indicates a monetary difficulty.

"A lot of these people have 2 or 3% interest rate loans," Kelly says. With the PCP program they could keep that rate of interest. Now, she says, the only method they'll be able to save their home is to participate in a loan modification where the interest rate 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, due to the fact that the VA has actually decided to end the partial claim program."

Many house owners can't afford such a big boost in their monthly payment.

According to the data firm ICE Mortgage Technology, 6,000 property owners with VA loans who had actually COVID forbearances are currently in the foreclosure process. And 34,000 more are overdue.

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

But house owners with VA loans do not, because the VA ended that program. So veterans are being dealt with worse than many other house owners, Kelly said.

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

VA has a plan to help, however it could be far too late

The Department of Veterans Affairs states it had no option but to end the program.

"We had a short-term authority for that specific program during COVID," states John Bell, executive director of the Veterans Benefits Administration's Loan Guaranty Service. "It wasn't part of our regular authority."

Some in the market think the VA did, in reality, have the authority to extend the program. But in any 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 operate in a various way however to similar effect, to save individuals from foreclosure. Bell says it's going to take 4 to 5 months to get it up and running.

That's too wish for many of those 6,000 VA house owners already in the foreclosure process. Not to mention the numerous more who are delinquent.

Already, information shows that more VA house owners have been heading into foreclosure given 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 show up far too late?

With so lots of house owners at danger, there's growing pressure on the VA to stop foreclosing on veterans up until it gets its fix up and running.

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

Sharpe states the VA might also restart the PCP program that it closed 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 between from time to time," he states. "Then when the VA has that repaired we can come back and resolve the scenario. That looks 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 straight. Bell said the VA is "checking out all options at this moment in time."

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

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

"Without this pause, 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 instant time out on all VA loan foreclosures where debtors are likely to be eligible for VA's new ... program till it is available and borrowers can be examined to see if they certify."

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

LEILA FADEL, HOST: An NPR examination has discovered 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 dealing with 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 home, he states that he was injured by an improvised explosive device, or IED.RAY QUEEN: And so you understand, I have brain damage from my time in Iraq. So there's a lot of various things that don't work the way they're expected to any longer. 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. Now the VA has put this household on the verge of losing their house.B QUEEN: This is the letter that my partner and I received yesterday stating that they're starting foreclosure proceedings.ARNOLD: What's taking place 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 people who lost income. When Becky's mom passed away of COVID, she had to take an extended leave from work and lost her job. In 2015, the couple states their mortgage business informed them that they could skip six months of payments while they got back on their feet and after that simply 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 move to the back end of their loan term so they might resume their regular 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 allowed 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 because thousands of homeowners required to capture up on missed out on payments. Rates of interest, too, had actually risen so much that lots of could not pay for to refinance or get back on track any other method. Ray Queen says no one told him about any of this.R QUEEN: How does that take place? This is supposed to be a program that y' all have to help 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 substantial 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 really let individuals down.ARNOLD: Kristi Kelly is a customer legal representative in Virginia who's hearing from a great deal of veterans who remain in the very same boat.KELLY: The homeowners participated in COVID forbearances. They were made sure pledges, and the VA essentially pulled the rug out from under everybody.ARNOLD: Kelly states for a lot of other homeowners 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 worse than the majority of other homeowners.KELLY: Service members are going to lose their home, and for a lot 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 choice 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 found out that the VA is dealing with a brand-new program to change the old one, but that's still four or five months away - too long for a lot of the 6,000 homeowners with VA loans who are in the foreclosure procedure. Not to point out 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 says the VA is, quote, "considering all choices."BELL: We owe it to our veterans to make sure that we're providing every chance to be able to stay in the home.ARNOLD: Ray and Becky Queen are hoping that the VA does put a pause on foreclosures, because if the fire truck shows up after your home burns down, it's not going to do much helpful for the thousands of veterans who need aid now.Chris Arnold, NPR News.