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Senators to VA: Stop needless foreclosures on thousands of veterans

Army veteran Raymond Queen stands with his wife Rebecca Queen outside their home in Bartlesville, Okla.
Michael Noble Jr. for NPR
Army veteran Raymond Queen stands with his wife Rebecca Queen outside their home in Bartlesville, Okla.

A group of U.S. senators is asking the Department of Veterans Affairs to put an immediate stop to foreclosures on the homes of veterans and service members.

The senators cited an investigation by NPR that found thousands of veterans who took what's called a COVID forbearance — a program that allowed them to defer paying their mortgages and keep their homes during the pandemic — are now at risk of losing their homes through no fault of their own.

"Without this pause, thousands of 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."

The forbearance program was set up by Congress after the pandemic hit in order to let people who suffered a loss of income skip mortgage payments for 6 or 12 months, and then have an affordable way to start paying their mortgage again.

But in October 2022, the VA ended the part of the program that allowed homeowners an affordable way to get current on their loans again, which has left many veterans facing foreclosure. The VA has a new program to replace it, but says it will take four or five months to implement.

That's too late to help many of the 6,000 people with VA loans who had COVID forbearances and are currently in the foreclosure process. 34,000 more are delinquent according to the data firm ICE Mortgage Technology.

"In the meantime, tens of thousands of veterans and servicemembers are left with no viable options to get back on track with payments and save their homes," the senators wrote.

The group of senators includes Tester, who chairs the Veterans' Affairs Committee, and Brown who chairs the Banking Committee. They asked the VA, "to implement an immediate pause on all VA loan foreclosures where borrowers are likely to be eligible for VA's new...program until it is available and borrowers can be evaluated to see if they qualify."

The heart of the problem is that many homeowners were told before they entered into a mortgage forbearance that the missed payments would be moved to the back end of their loan term, so they wouldn't get stuck owing them in a big lump sum. They were told they'd be able to simply return to making their regular monthly mortgage payment when they got back on their feet financially.

Homeowners with loans backed by FHA or the government sponsored enterprises Fannie Mae or Freddie Mac all still have ways to do that. But not homeowners with VA Loans because the VA ended its program that enabled them to resume paying their original mortgage again.

With interest rates dramatically higher now compared to during the pandemic, both consumer and industry groups say these homeowners have no affordable path to get back on track. Many are being told they either need to pay tens of thousands of dollars to catch up, or refinance into a loan at today's high interest rates — neither of which they can afford. So they are being forced either to sell their house or lose it to foreclosure.

The VA did not have an immediate response to the letter from the lawmakers. But John Bell, the head of the VA's loan program, previously told NPR that the VA is "exploring 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 stay in the home," Bell said.

The senators, in their letter, commended the VA on its efforts to come up with a new program. "We appreciate the significant work that VA has undertaken and the dedication of VA staff," they wrote. But until that program is up and running, they want the VA to stop the foreclosures.

"With each additional day that passes, risks mount for borrowers who are facing foreclosure while they wait for a solution from VA."

Meanwhile, NPR has heard from veterans around the country who feel misled, embarrassed, angry or scared to be facing bankruptcy or foreclosure for the first time in their lives.

Halting the foreclosures sounds like a good idea to Army veteran Ray Queen in Bartlesville, Okla., who was wounded in Iraq. "Let us keep paying towards our regular mortgage between now and then," he previously told NPR. "Then once the VA has that fixed we can come back and address the situation. That seems like the adult, mature thing to do, not put a family through hell."

Copyright 2023 NPR. To see more, visit https://www.npr.org.

NPR correspondent Chris Arnold is based in Boston. His reports are heard regularly on NPR's award-winning newsmagazines Morning Edition, All Things Considered, and Weekend Edition. He joined NPR in 1996 and was based in San Francisco before moving to Boston in 2001.
Quil Lawrence is a New York-based correspondent for NPR News, covering veterans' issues nationwide. He won a Robert F. Kennedy Award for his coverage of American veterans and a Gracie Award for coverage of female combat veterans. In 2019 Iraq and Afghanistan Veterans of America honored Quil with its IAVA Salutes Award for Leadership in Journalism.