Countless veterans face 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 remembers opening the letter with the foreclosure notice.

"My heart dropped," she stated, "and my hands were shaking."

Queen survives on a small farm in rural Oklahoma with her partner, Ray, and their two young kids. Ray is a U.S. Army veteran who was injured 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 edge of losing their home.

"I didn't do anything wrong," states 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 advantage of what's called a COVID mortgage forbearance, which allowed homeowners to avoid mortgage payments. It was established by Congress after the pandemic hit for individuals who lost income.

But an NPR investigation has 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 dealing with 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 4 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 begun in September of 2021, when Becky's mother passed away of COVID-19. She needed to take an extended leave from work and lost her job.

So in 2015, with their savings diminishing, the couple says they called the company that handles their mortgage, Mr. Cooper, and were told they might avoid 6 months of payments. And when they got back on their feet and might start paying again, the couple states they were informed, they wouldn't owe the missed out on payments in a big lump amount.

"I very specifically 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 out on payments would be transferred to the back end of their loan term so they could simply begin 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 homeowners to do that. This occurred despite the fact that the mortgage industry, housing advocates and veterans groups all alerted the VA not to end the program, stating countless property owners required to capture up on missed out on payments. Interest rates had increased so much that numerous could not manage to refinance or return on track any other method.

Ray Queen states nobody informed him about any of this.

"How does that occur?" 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 state 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 company.

Then, in September, the couple says they were informed they needed to come up with more than $22,000, which they don't have, or either offer their home or get foreclosed on.

Their mortgage servicing company, Mr. Cooper, said in a statement it "explored every possible opportunity to work through an option for this customer." But it stated the VA requires much better loss-mitigation options and referred NPR to a letter from advocates, industry and veteran groups urging the VA to reboot the PCP program.

The VA "has actually let individuals down"

"The Department of Veterans Affairs has really let individuals down," states Kristi Kelly, a customer legal representative in Virginia who states she is hearing from a great deal of other veterans in the very same situation as Ray and Becky Queen.

"The property owners entered into COVID forbearances, they were made sure promises, and there were certain representations that were made," states Kelly. "And the VA basically pulled the carpet out from under everybody."

For some house owners, ending the program might not indicate foreclosure, but it still means a monetary hardship.

"A number of these individuals have 2 or 3% rate of interest loans," Kelly says. With the PCP program they might keep that rate of interest. But now, she says, the only way they'll have the ability to conserve their home is to enter into a loan modification where the interest rate will be around today's market rate of 7.5%.

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

Many homeowners can't afford such a substantial increase in their monthly payment.

According to the information company ICE Mortgage Technology, 6,000 house owners with VA loans who had COVID forbearances are currently in the foreclosure process. And 34,000 more are overdue.

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 avoid foreclosure by moving missed out on 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 treated worse than many other property owners, Kelly stated.

"Service members remain 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 is in their homes."

VA has a strategy to help, however it might be far too late

The Department of Veterans Affairs states it had no choice 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 believe the VA did, in fact, have the authority to extend the program. But either way, it ended it.

Now, however, the VA is taking the situation seriously.

NPR has learned that the VA is dealing with a new program to replace the old one. It will operate in a different method but to comparable result, to conserve individuals from foreclosure. Bell says it's going to take four 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 procedure. Not to point out the lots of more who are overdue.

Already, information reveals that more VA house owners have actually been heading into foreclosure because 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 show up too late?

With numerous homeowners at threat, there's growing pressure on the VA to stop foreclosing on veterans up until it gets its repair up and running.

"There need to be a pause on foreclosures," says Steve Sharpe, a senior lawyer at the National Consumer Law Center. "Veterans need to truly have the ability to have an ability to access this program when it comes online due to the fact that it's been so long because they have actually had something that will truly 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 an excellent idea to veteran Ray Queen in Oklahoma.

"Let us keep paying towards our routine mortgage in between now and then," he says. "Then when the VA has actually that fixed we can come back and attend to the circumstance. That seems 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 straight. Bell said the VA is "exploring all choices at this moment in time."

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

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

"Without this time out, countless veterans and servicemembers could 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 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 debtors are likely to be eligible for VA's new ... program till it is offered and borrowers can be examined to see if they certify."

Ray and Becky Queen are hoping the VA does let individuals keep their homes until the brand-new program can use 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 require aid now.

Transcript

LEILA FADEL, HOST: An NPR investigation has actually found that countless 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 2 young kids. Ray served in Iraq in the Army. Inside their house, he states that he was injured by an improvised explosive device, or IED.RAY QUEEN: And so you know, I have mental retardation from my time in Iraq. So there's a great deal of different things that don't work the method they're supposed to any longer. And my memory is not great.ARNOLD: For decades, the federal government's helped veterans like Queen to purchase homes through its VA loan program. But now the VA has put this household on the verge of losing their house.B QUEEN: This is the letter that my other half and I received yesterday specifying that they're beginning foreclosure proceedings.ARNOLD: What's taking place is that like millions of other Americans, the Queens made the most of what's called a COVID mortgage forbearance. It was established by Congress after the pandemic hit for individuals who lost income. When Becky's mommy passed away of COVID, she had to take an extended leave from work and lost her job. In 2015, the couple says their mortgage company informed them that they could avoid six months of payments while they returned on their feet and then simply start paying their mortgage again.B QUEEN: I really 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 exercised, since a year ago in October, the Department of Veterans Affairs ended the program that made it possible for property owners to do that, although housing supporters and the mortgage industry and veterans groups all alerted them not to end the program due to the fact that thousands of house owners required to catch up on missed payments. Rates of interest, too, had increased a lot that numerous could not afford to re-finance or return on track any other way. 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 have to assist 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 big payment - upwards of $22,000, which they do not 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 individuals down.ARNOLD: Kristi Kelly is a consumer attorney in Virginia who's hearing from a lot of veterans who are in the very same boat.KELLY: The homeowners got in into COVID forbearances. They were made sure guarantees, and the VA essentially pulled the rug out from under everybody.ARNOLD: Kelly states for the majority of other homeowners in America, there are still methods to move your missed out on payments to the back of the loan term so you can prevent getting foreclosed on, but not if you have a VA loan. So she states veterans are being dealt with even worse than the majority of other homeowners.KELLY: Service members are going to lose their home, and for many individuals, 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 financing division.JOHN BELL: We had a short-term authority for that specific program throughout COVID.ARNOLD: Some in the market think the VA did in fact have the authority to extend the program. Now, however, NPR has found out that the VA is dealing with a new program to replace the old one, however that's still 4 or five months away - too wish for much of the 6,000 house owners with VA loans who are in the foreclosure process. Not to point out there's 34,000 more who were overdue. Today there's pressure on the VA to put a pause on foreclosures while it gets that program running. John Bell states the VA is, quote, "thinking about all choices."BELL: We owe it to our veterans to make certain that we're providing every chance to be able to remain in the home.ARNOLD: Ray and Becky Queen are hoping that the VA does put a pause on foreclosures, since if the fire engine appears after your house burns down, it's not going to do much excellent for the countless veterans who require aid now.Chris Arnold, NPR News.