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Veterans with VA loans facing foreclosure after COVID forbearance may get help
Senators are introducing a bill to help thousands of veterans who, through no
fault of their own, were left facing foreclosure when a VA COVID-assistance
program ended abruptly.


NATIONAL


LAWMAKERS MOVE TO HELP VETERANS AT RISK OF LOSING THEIR HOMES

February 1, 20246:15 PM ET

By 

Chris Arnold

, 

Quil Lawrence

Enlarge this image

Former Marine Jason Miles stands in front of his home in Clinton, Miss. He lost
a sales job during the pandemic and had to take a mortgage forbearance. Imani
Khayyam for NPR hide caption

toggle caption
Imani Khayyam for NPR


Former Marine Jason Miles stands in front of his home in Clinton, Miss. He lost
a sales job during the pandemic and had to take a mortgage forbearance.

Imani Khayyam for NPR

The chairmen of the U.S. Senate's Banking and Veterans Affairs committees
introduced a bill Thursday to help veterans at risk of losing their homes
because of a COVID-assistance program that the VA ended abruptly in 2022.

The bill, which they call the "Veterans Housing Stability Act," would let the
Department of Veterans Affairs restart the program, which thousands of veterans
used to skip mortgage payments when they faced pandemic-related financial
problems.

"Our veterans earned their home loan guarantee benefit, and they deserve a
viable option to get back on track with payments and keep their homes," said
Sen. Jon Tester, a Montana Democrat and chairman of the Veterans Affairs
Committee. He sponsored the bill along with Sen. Sherrod Brown, an Ohio Democrat
who heads the Banking Committee.

Enlarge this image

Sen. Jon Tester, D-Mont., departs from a briefing for U.S. senators at the U.S.
Capitol on Sept. 7, 2023. Anna Moneymaker/Getty Images hide caption

toggle caption
Anna Moneymaker/Getty Images


Sen. Jon Tester, D-Mont., departs from a briefing for U.S. senators at the U.S.
Capitol on Sept. 7, 2023.

Anna Moneymaker/Getty Images

Like millions of other Americans, veterans took advantage of what's called a
COVID mortgage forbearance, which allowed homeowners to stop paying their
mortgage for six to 18 months. It was set up by Congress after the pandemic hit
for people who lost income. But an NPR investigation last November found that
tens of thousands of veterans who took a forbearance were suddenly left with no
way to resume making payments after the VA ended a crucial part of the program
for people with VA loans.

Sponsor Message



One homeowner affected was Marine combat veteran Jason Miles.

Miles served four tours, in Iraq, Afghanistan and Syria. He lost a sales job
during the pandemic and had to take a forbearance when he couldn't afford his
mortgage. Like many veterans, he was told the missed payments would be moved to
the back end of his loan term. But then the VA ended the part of the program
that allowed homeowners to do that, leaving Miles and thousands of others facing
foreclosure.

"This is horrifying," Miles told NPR in November. "I'm scared to death that
we're about to lose our home."

After NPR first reported on the problem, the VA stopped the foreclosures and
announced a six month pause while it worked to roll out a fix.

The sponsors of Thursday's bill say their legislation could play a key role. It
would make clear that the VA has the authority to restart the program that it
shut down back in 2022.

Enlarge this image

Sen. Sherrod Brown, D-Ohio, looks on during a Senate committee hearing on May
16, 2023. Mandel Ngan/AFP via Getty Images hide caption

toggle caption
Mandel Ngan/AFP via Getty Images


Sen. Sherrod Brown, D-Ohio, looks on during a Senate committee hearing on May
16, 2023.

Mandel Ngan/AFP via Getty Images

Brown said the bill "will keep our promises to veterans and service members
today and in the future by giving homeowners affordable options to stay in their
homes."

The VA's Partial Claim Payment program enabled mortgage companies to bundle up
the missed payments from a forbearance and effectively move them to the back of
the loan term so the homeowner could just return to making normal mortgage
payments — with the same principal and interest payment and interest rate as
before the forbearance. The missed payments would get paid back when the
homeowner sold the house or refinanced down the road.



The VA told NPR it had concluded that it no longer had the authority to do that
after October of 2022. Industry and housing experts disagreed and warned the VA
that given a historic spike in mortgage rates, ending the program would strand
thousands of veterans with no affordable way to get current on their loans. But
the VA ended the program anyway and didn't replace it.


ECONOMY


ARE YOU A HOMEOWNER WHO HAS RUN INTO PROBLEMS ON A COVID MORTGAGE FORBEARANCE?

Since the 1940s, loans backed by the VA have been a bedrock part of the benefits
offered to military veterans. But since October of 2022, VA loans have had worse
options for homeowners who are behind on payments compared to mortgages backed
by the FHA or the government-sponsored enterprises Fannie Mae and Freddie Mac.

"Our veterans and service members need to be able to bring their mortgage
current," said Tester. "Our bill will ensure they can do that and are granted
the same options as they would be under other federally backed loans."

The VA guarantees the loans, but they're actually made and managed by private
lenders, who appear supportive of the Senate bill.

"We think a partial claim, which is necessary to enable forbearance in the VA
program, is very important," said Justin Wiseman with the Mortgage Bankers
Association. The group has been calling on the VA to offer more affordable ways
for homeowners to get current.


INVESTIGATIONS


THOUSANDS OF VETERANS FACE FORECLOSURE AND IT'S NOT THEIR FAULT. THE VA COULD
HELP


INVESTIGATIONS


VETERANS FEAR THE VA'S NEW FORECLOSURE RESCUE PLAN WON'T HELP THEM

Alongside the new legislation, the VA says it is working on a new loan
modification program that could help the thousands of vets who were delinquent
or in the foreclosure process before it paused foreclosures.

At a press conference on Tuesday, VA Secretary Denis McDonough said he is eager
to work with Congress on a fix for the forbearance problem, and he promised the
VA's own fix would be ready by summer.

"Each of these steps is meant to ensure that our veterans who have confronted
this difficult challenge know that we're here for them and we can help them
manage through this period coming out of the pandemic," said McDonough. "If that
is not the case, I urge our veterans to please be in touch with us so that we
can address any questions or concerns or confusion that they're encountering."



But while homeowners who were on the verge of foreclosure have a reprieve,
there's another group of veterans who may not be getting any help.

Many people with VA loans ended up in loan modifications with much higher
monthly payments as a result of the VA ending its pandemic relief program. The
VA hasn't yet told NPR how many veterans this happened to or whether it is going
to do anything for them. In an interview with NPR, Sen. Tester acknowledged that
this initial bill doesn't address those veterans, but he vowed that they will be
made whole.

"The VA needs to be tracking this and we're going to continue to put pressure on
them," Tester said.

Enlarge this image

The VA has paused home foreclosures, which gives Miles some breathing room.
Imani Khayyam for NPR hide caption

toggle caption
Imani Khayyam for NPR


The VA has paused home foreclosures, which gives Miles some breathing room.

Imani Khayyam for NPR

As for veteran Jason Miles in Mississippi, back in November his mortgage company
was telling him he had to come up with a year's worth of missed payments all at
once to make his loan current.

"It was essentially 'you've gotta pay the $20,000 or you're going into
foreclosure.'"

These days Miles is a teacher and a coach at Clinton Christian Academy, a high
school in Clinton, Miss. But even after selling some furniture and some of his
firearms, there was no way he could come up with a lump sum payment to avoid
losing the house where he lives with his wife and three children.

He could, however, afford to resume making his monthly mortgage payments. But
his mortgage company still won't accept monthly payments unless he somehow gets
his loan current again.

Now that the VA has paused foreclosures, that gives Miles some breathing room.
He just hopes the VA can actually come up with a fix.

"I'm still very nervous about it," he says. But he adds, "I have hope now."

 * COVID Forbearance
 * VA loan foreclosure
 * VA Loan
 * forbearance
 * foreclosure
 * Veterans
 * mortgage

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