Lawmakers summoned the head of the Department of Veterans Affairs’ loan program, John Bell, to Capitol Hill this week and asked him to explain how the VA is going to fix a debacle that’s left many vets in danger of losing their homes.
His answer: They don’t know yet.
“We are looking for a solution to be able to help 40,000 borrowers stave off foreclosure,” Bell told them.
The VA has been scrambling since an NPR investigation revealed that it pulled the plug on a key program while thousands of vets were still in the middle of it – effectively turning a well-meaning pandemic aid effort into a bait-and-switch trap for homeowners.
At issue is what’s called a COVID mortgage forbearance. Set up by Congress after the pandemic hit to help people who lost income, it gave homeowners with federally backed loans a sanctioned way to skip mortgage payments. The missed payments would get moved to the back of the loan term so when homeowners got back on their feet they could just resume their normal payments.
But in October 2022, the VA abruptly ended a crucial part of its forbearance program, stranding tens of thousands of vets who were told they now needed to come up with all the missed payments at once.
“I’m like, how am I gonna come up with … almost $23,000? How am I gonna come up with that?” asks Edmund Garcia, a combat veteran who served in Iraq.
Garcia’s wife lost her job during the pandemic, and when he called his loan servicer in late 2022, he was offered a forbearance. After three months, Garcia says he tried to start paying again but was told the program had ended. The mortgage company said if he couldn’t afford to pay back all the missed payments in a lump sum then he couldn’t resume making his regular monthly payments. So he fell further behind. Then just weeks ago he was notified that all the missed payments were now due.
“You know, what am I supposed to do?” Garcia said. The paperwork from his lender said he could sell his home in a short sale as one option. “I’m gonna lose my home. What am I gonna do with my kids?” he says.
After NPR first reported on the problem last November, lawmakers wrote to the VA secretary, who quickly put apause on all foreclosuresof VA loans. The delay was planned to last six months, after which the VA said it would have a solution that will allow veterans to resume an affordable mortgage payment.
In the meantime, many veterans say their loan servicers are still pushing them to either pay all the missed payments immediately or accept costly loan modifications.
Garcia is a first-generation American; his parents are from Honduras. He was the first…
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