leonisinmobiliaria

Thousands of veterans face foreclosure and it's not their fault. The VA might assist

By Chris Arnold, Robert Benincasa
reference.com
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 stated, "and my hands were shaking."

Queen resides 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 actually helped veterans like him buy homes through its VA loan program, run by the Department of Veterans Affairs.

But now the VA has put this household 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 supposed to rely on with my mortgage."

Like millions of other Americans, the Queens benefited from what's called a COVID mortgage forbearance, which allowed property owners to skip mortgage payments. It was set up by Congress after the pandemic hit for people who lost income.

But an NPR examination has actually 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 working on a way to fix the issue, for lots of it could be far too late.

After NPR at first 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 unclear if the VA will do that.

For the Queens, this all started in September of 2021, when Becky's mom died of COVID-19. She needed to take a prolonged leave from work and lost her job.

So last year, with their cost savings decreasing, the couple states they called the business that handles their mortgage, Mr. Cooper, and were informed they might avoid six months of . And once they got back on their feet and might begin paying once again, the couple says they were informed, they would not owe the missed payments in a big swelling amount.

"I really 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 payments would be relocated to the back end of their loan term so they might 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 enabled property owners to do that. This happened although the mortgage market, housing advocates and veterans groups all warned the VA not to end the program, saying thousands of house owners required to capture up on missed payments. Rates of interest had actually risen so much that lots of couldn't pay for to refinance or get back on track any other way.

Ray Queen says nobody told him about any of this.

"How does that take place?" Queen asked. "This is supposed to be a program that you all need to assist individuals 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 again. But they encountered delays 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 do not have, or either sell their home or get foreclosed on.

Their mortgage servicing company, Mr. Cooper, said in a declaration it "explored every possible opportunity to resolve an option for this consumer." But it said the VA needs better loss-mitigation choices and referred NPR to a letter from advocates, industry and veteran groups urging the VA to reboot the PCP program.

The VA "has truly let people down"

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

"The house owners entered into COVID forbearances, they were ensured pledges, and there were particular representations that were made," says Kelly. "And the VA basically pulled the carpet out from under everyone."

For some house owners, ending the program might not mean foreclosure, however it still suggests a financial hardship.

"Many 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 method they'll be able to conserve 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 the majority of people, their payments will increase by $600 or $700 a month, since the VA has actually decided to end the partial claim program."

Many house owners can't afford such a huge increase in their monthly payment.

According to the information firm ICE Mortgage Technology, 6,000 homeowners with VA loans who had actually COVID forbearances are currently in the foreclosure procedure. And 34,000 more are overdue.

Kelly states most other house owners in America - people with FHA loans, for example, 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 do not, because the VA ended that program. So veterans are being dealt with worse than the majority of other property 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 everything they work for - and all their wealth remains in their homes."

VA has a plan to assist, however it might be far too late

The Department of Veterans Affairs says 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 normal authority."

Some in the market think 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 circumstance seriously.

NPR has actually found out that the VA is working on a brand-new program to replace the old one. It will operate in a various method however to similar impact, to conserve individuals from foreclosure. Bell states it's going to take four to five 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 mention the many more who are delinquent.

Already, data reveals that more VA homeowners have been heading into foreclosure considering that the VA ended its PCP program. The very same is not real for FHA loans or loans backed by Fannie Mae or Freddie Mac.

Will the firetruck arrive 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 should be a time out on foreclosures," states Steve Sharpe, a senior attorney at the National Consumer Law Center. "Veterans must truly have the ability to have a capability to access this program when it comes online due to the fact that it's been so long considering that they've had something that will really work.

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

Pausing foreclosures sounds like a great concept to veteran Ray Queen in Oklahoma.

"Let us keep paying towards our regular mortgage in between once in a while," he says. "Then once the VA has that repaired we can return and resolve 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 directly. Bell said the VA is "checking out all alternatives at this point in time."

"We owe it to our veterans to make certain that we're providing every chance 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 any more 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 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 execute an instant time out on all VA loan foreclosures where debtors are most likely to be eligible for VA's new ... program till it is available and customers can be evaluated to see if they qualify."

Ray and Becky Queen are hoping the VA does let individuals keep their homes up until the brand-new program can use them a way to get current on their mortgages. Because if the firetruck appears after your home has burned down, it's not going to do much excellent for the thousands of veterans and service members who need help now.

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 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 simply so you know, I have mental retardation from my time in Iraq. So there's a lot of different things that don't work the method they're expected to any longer. And my memory is not great.ARNOLD: For years, the federal government's assisted veterans like Queen to purchase 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 husband and I got yesterday stating that they're starting foreclosure proceedings.ARNOLD: What's occurring is that like millions of 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 people who lost earnings. When Becky's mommy died of COVID, she had to take an extended leave from work and lost her task. Last year, the couple says their mortgage business told them that they could avoid 6 months of payments while they got back on their feet and after that simply start paying their mortgage again.B QUEEN: I very specifically 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 out on payments would move 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 enabled house owners to do that, even though housing advocates and the mortgage industry and veterans groups all alerted them not to end the program due to the fact that thousands of homeowners required to capture up on missed out on payments. Rate of interest, too, had actually risen a lot that numerous couldn't afford to refinance or get back on track any other method. Ray Queen states no one informed him about any of this.R QUEEN: How does that occur? This is supposed 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 informed that they needed to come up with a big payment - upwards of $22,000, which they don't 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 actually let individuals 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 homeowners participated in COVID forbearances. They were made sure pledges, and the VA essentially pulled the carpet out from under everybody.ARNOLD: Kelly states for the majority of other homeowners in America, there are still methods to move your missed payments to the back of the loan term so you can prevent getting foreclosed on, however not if you have a VA loan. So she says veterans are being treated worse than many other homeowners.KELLY: Service members are going to lose their home, and for the majority of people, that's everything they work for and all their wealth, are in their homes.ARNOLD: For its part, the Department of Veterans Affairs says it had no choice but to end the program. John Bell directs the VA's home loaning division.JOHN BELL: We had a short-term authority for that particular program during COVID.ARNOLD: Some in the market believe the VA did really have the authority to extend the program. Now, however, NPR has discovered that the VA is dealing with a brand-new program to replace the old one, however that's still 4 or 5 months away - too wish 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 delinquent. 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 alternatives."BELL: We owe it to our veterans to make certain that we're offering them 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 the house burns down, it's not going to do much great for the countless veterans who need aid now.Chris Arnold, NPR News.
askmoney.com