West Haven (Conn.) Veterans Affairs Medical Center. (Department of Veterans Affairs)
The Department of Veterans Affairs is extending a pandemic-era program that helped financially strapped veterans keep their homes after criticism that it wasn’t doing enough to prevent those with VA-backed loans from foreclosure.
The VA also called on mortgage servicers to pause foreclosures of VA-guaranteed loans through May 31, to allow the VA to present workable home retention solutions, VA Press Secretary Terrence Hayes said Friday.
“By pausing foreclosures and extending the COVID-19 Refund Modification program, we can continue assisting veterans with their loans while we launch our newest home retention option, the VA Servicing Purchase (VASP) program,” he said.
Through VASP, the VA will purchase defaulted VA loans from mortgage servicers, modify the loans, and then place them in the VA-owned portfolio as direct loans.
“This will empower us to work with veterans experiencing severe financial hardship to adjust their loans – and their monthly payments – so they can keep their homes,” Hayes said.
The announcement followed a letter sent Wednesday to VA Secretary Denis McDonough from four Democratic senators asking him to protect veterans from foreclosure even as the pandemic-era program for mortgage forbearance ended one year ago.
“During the pandemic, the Department of Veterans Affairs helped thousands of veterans and servicemembers stay in their homes. But part of the program that helped them get back on track with their payments expired last year, leaving many veterans facing foreclosure,” said Sen. Tim Kaine of Virginia, who authored the letter alongside Sens. Sherrod Brown of Ohio, Jack Reed of Rhode Island and Jon Tester of Montana.
Those who took advantage of the program were told they would not have to repay all missed payments at once, but that scenario was happening to some homeowners, according to an investigation by National Public Radio. A secondary option to refinance didn’t help as it would mean higher interest rates and higher monthly payments.
These options left veterans worse off than borrowers with Federal Housing Administration loans or loans backed by Fannie Mae and Freddie Mac, which allow borrowers to move missed payments to the end of their loan term, the senators wrote.
“Tens of thousands of veterans and servicemembers are left with no viable options to get back on track with payments and save their homes. Stories from across the country show that this is already having severe consequences for veterans and their families,” the senators wrote.
With the extension of the mortgage forbearance program, the VA will allow veterans to obtain a zero-interest, deferred-payment loan from VA to cover missed payments and modify their existing VA-guaranteed loan to achieve affordable monthly payments for the duration of this extension, Hayes said.
The VA helped more than 145,000 veterans and their families retain their homes and avoid foreclosure during the past year, Hayes said. Foreclosure rates of VA-backed mortgages are among the lowest in the country, said.
“And at the same time, we know that there are still veterans struggling to make their payments,” Hayes said.
He urged any veteran struggling with making mortgage payments to connect with the VA at www.va.gov/housing-assistance or 877-827-3702.
Thayer.rose@stripes.com Twitter: @Rose_Lori
