Veterans Affairs fixes mortgage failures, but not everyone gets help: NPR
Iraq War veteran Edmund Garcia stands outside his home in Rosharon, Texas. Like many veterans, he was told that if he received forbearance on his mortgage, his subsequent monthly payments would not increase.
NPR's Joseph Bui
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NPR's Joseph Bui
Iraq War veteran Edmund Garcia stands outside his home in Rosharon, Texas. Like many veterans, he was told that if he received forbearance on his mortgage, his subsequent monthly payments would not increase.
NPR's Joseph Bui
The Department of Veterans Affairs announced Wednesday a long-awaited new program to help thousands of remaining veterans. I'm on the verge of losing my home After pandemic aid efforts failed.
However, many of those who have suffered financially are unlikely to qualify for this new aid.
“The purpose of this program is to assist the more than 40,000 veterans who are most at risk of foreclosure,” Josh Jacobs, assistant secretary for veterans benefits, said during a media roundtable. Veterans Affairs Service Purchase Program, or “VASP.”
What VA leaders did not make clear on the call with reporters was that the VA was the one that put veterans in such a difficult position in the first place. In 2022, the Veterans Administration abruptly ends part of its COVID-19 mortgage forgiveness program, even though tens of thousands of veterans are still in the program, leaving them with no money to pay off their loans. There is no longer an affordable way.
VASP is supposed to solve this problem by allowing the VA to offer loan modifications to these homeowners at rates well below market rates for regular mortgages. The Veterans Administration will offer veterans who own their own mortgages and qualify for modified mortgages at an interest rate of 2.5%.
But not everyone who is injured qualifies. Most veterans who already end up taking out much more expensive modification loans will not receive any assistance.
VA tolerance debacle
In November, the Veterans Administration suspended foreclosures on all homeowners with VA-backed loans. NPR investigation Officials revealed that they had exposed thousands of veterans to foreclosure through no fault of their own.
The Coronavirus Mortgage Forgiveness Program was established by Congress during the pandemic to give people with federally backed loans an affordable way to skip mortgage payments and get their loans back on track. It is intended to.
However, in late 2022, the Veterans Administration abruptly ended the Partial Claims Payment (PCP) program. Under this program, homeowners after the forbearance period were able to roll up their unpaid balance toward the end of their loan term to maintain the interest rate on their original mortgage. .
This effectively turned a well-intentioned program into a bait-and-switch trap. Veterans said they were told before receiving forbearance that their regular monthly mortgage payments would not be increased and that any missed payments could be rolled over later in the loan term. But after the Veterans Administration discontinued his PCP program, the veterans were told they had to pay all their outstanding balances at once.
“$23,000 coming up? How are we going to come up with it?” Edmund Garcia asked in an interview with NPR earlier this year. Mr. Garcia is a veteran of Iraq. He used a VA mortgage to buy a house in Rosharon, Texas. After his wife lost her job during the pandemic, the mortgage company offered him a forbearance.
Edmund Garcia has a photo of himself as an ammunition and supplies handling specialist while in the Army in 2000.
NPR's Joseph Bui
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NPR's Joseph Bui
Edmund Garcia has a photo of himself as an ammunition and supplies handling specialist while in the Army in 2000.
NPR's Joseph Bui
The Veterans Administration had other loan modification options, but they essentially required taking out a new mortgage at a new interest rate, which rose rapidly from about 3% to about 7%. .
Garcia was told that if she was unable to pay off all of her past due payments at once, she would have to accept a loan modification that would significantly increase her monthly bill. His previous mortgage rate was 2.4%. This proposal would increase his payments by $700 per month to 7.1%. Or it could be seized.
“I struggle with PTSD and I also deal with anxiety, and my heart was beating in my chest as I was having this conversation,” he told NPR. “My daughter is asking, “Dad, are you okay?''
Now, it appears that veterans who caved to that pressure and accepted these expensive loan modifications will not be able to receive assistance through the Department of Veterans Affairs' new relief plan.
Veterans forced into expensive loans can't get help
“If you're not going to default, this program isn't for you,” VA Home Loan Program Director John Bell told NPR at a press conference this week. “And you have to continue defaulting for a period of time.”
In other words, veterans who pay these expensive loans are not eligible. And it seems like that's going to exclude a lot of people.
Data obtained by NPR suggests that thousands of veterans received mortgage forbearance and ended up taking out modified loans with significantly higher interest rates.
The fine print of the Veterans Administration's new program also says that if a loan is modified, the borrower must make at least six months of repayments and then be in default for at least three months to qualify.
To some policy experts, this does not seem like the right approach.
“There's no way a renter should have to pay for six months of bad renovations that they can't afford,” said Steve Sharp of the nonprofit National Consumer Law Center.
The rule also means that if a veteran tries to pay for a higher loan modification for several months, then defaults and can't afford to pay, they won't qualify.
“Even if you fail to make cost-effective modifications, you should still be able to access VASP,” Sharp said.
To give the Veterans Administration time to consider resolving these issues, and to give mortgage companies time to prepare and reach out to homeowners, the VA has announced that the VA deadline expiring at the end of May I think the loan foreclosure moratorium period should be extended.
Still, Sharp said the VASP relief plan should be a big help to those who qualify.
“The release of VASP is great news,” he said. “This is desperately needed because people have lacked a reasonable alternative to foreclosure for a long time. … We're very excited.”
Secretary of Veterans Affairs Jacobs told reporters that the main difference with the new program is that the VA will own the loans itself, rather than simply guaranteeing loans owned by investors. This would allow VA to set any mortgage interest rate it wants.
“These borrowers can afford to make consistent and affordable payments on the remainder of their loans at a fixed interest rate of 2.5%,” Jacobs said.
Back in Rosharon, Texas, Edmund Garcia wonders what's next.
Edmund Garcia stands with his wife, Iris Garcia, inside the home they share with their four daughters. Iris lost her job during the pandemic, and the mortgage company offered them a forbearance.
NPR's Joseph Bui
hide caption
toggle caption
NPR's Joseph Bui
Edmund Garcia stands with his wife, Iris Garcia, inside the home they share with their four daughters. Iris lost her job during the pandemic, and the mortgage company offered them a forbearance.
NPR's Joseph Bui
“I was a little shocked when I heard that I needed to qualify for this program,” Garcia told NPR this week.
The Veterans Administration says borrowers should work with and communicate with their mortgage companies. VA Loan Technician If you need help.
In Garcia's case, he never actually accepted that higher loan modification. Then, after reviewing the rules, he found out that he needed to qualify as a VASP. But there's a catch. According to the regulations, you will probably be given a 40-year mortgage. It can happen to many other veterans as well.
“Eventually I'll be 82 years old,” Garcia says. But he would still be willing to ask for help.
“This will be a huge relief to my family,” Garcia said. “And it feels like it's in my arms.”
Summarize this content to 100 words
Iraq War veteran Edmund Garcia stands outside his home in Rosharon, Texas. Like many veterans, he was told that if he received forbearance on his mortgage, his subsequent monthly payments would not increase.
NPR's Joseph Bui
hide caption
toggle caption
NPR's Joseph Bui
Iraq War veteran Edmund Garcia stands outside his home in Rosharon, Texas. Like many veterans, he was told that if he received forbearance on his mortgage, his subsequent monthly payments would not increase.
NPR's Joseph Bui
The Department of Veterans Affairs announced Wednesday a long-awaited new program to help thousands of remaining veterans. I'm on the verge of losing my home After pandemic aid efforts failed. However, many of those who have suffered financially are unlikely to qualify for this new aid. “The purpose of this program is to assist the more than 40,000 veterans who are most at risk of foreclosure,” Josh Jacobs, assistant secretary for veterans benefits, said during a media roundtable. Veterans Affairs Service Purchase Program, or “VASP.” What VA leaders did not make clear on the call with reporters was that the VA was the one that put veterans in such a difficult position in the first place. In 2022, the Veterans Administration abruptly ends part of its COVID-19 mortgage forgiveness program, even though tens of thousands of veterans are still in the program, leaving them with no money to pay off their loans. There is no longer an affordable way.
VASP is supposed to solve this problem by allowing the VA to offer loan modifications to these homeowners at rates well below market rates for regular mortgages. The Veterans Administration will offer veterans who own their own mortgages and qualify for modified mortgages at an interest rate of 2.5%. But not everyone who is injured qualifies. Most veterans who already end up taking out much more expensive modification loans will not receive any assistance. VA tolerance debacle In November, the Veterans Administration suspended foreclosures on all homeowners with VA-backed loans. NPR investigation Officials revealed that they had exposed thousands of veterans to foreclosure through no fault of their own. The Coronavirus Mortgage Forgiveness Program was established by Congress during the pandemic to give people with federally backed loans an affordable way to skip mortgage payments and get their loans back on track. It is intended to.
However, in late 2022, the Veterans Administration abruptly ended the Partial Claims Payment (PCP) program. Under this program, homeowners after the forbearance period were able to roll up their unpaid balance toward the end of their loan term to maintain the interest rate on their original mortgage. . This effectively turned a well-intentioned program into a bait-and-switch trap. Veterans said they were told before receiving forbearance that their regular monthly mortgage payments would not be increased and that any missed payments could be rolled over later in the loan term. But after the Veterans Administration discontinued his PCP program, the veterans were told they had to pay all their outstanding balances at once.
“$23,000 coming up? How are we going to come up with it?” Edmund Garcia asked in an interview with NPR earlier this year. Mr. Garcia is a veteran of Iraq. He used a VA mortgage to buy a house in Rosharon, Texas. After his wife lost her job during the pandemic, the mortgage company offered him a forbearance.
Edmund Garcia has a photo of himself as an ammunition and supplies handling specialist while in the Army in 2000.
NPR's Joseph Bui
hide caption
toggle caption
NPR's Joseph Bui
Edmund Garcia has a photo of himself as an ammunition and supplies handling specialist while in the Army in 2000.
NPR's Joseph Bui
The Veterans Administration had other loan modification options, but they essentially required taking out a new mortgage at a new interest rate, which rose rapidly from about 3% to about 7%. . Garcia was told that if she was unable to pay off all of her past due payments at once, she would have to accept a loan modification that would significantly increase her monthly bill. His previous mortgage rate was 2.4%. This proposal would increase his payments by $700 per month to 7.1%. Or it could be seized. “I struggle with PTSD and I also deal with anxiety, and my heart was beating in my chest as I was having this conversation,” he told NPR. “My daughter is asking, “Dad, are you okay?'' Now, it appears that veterans who caved to that pressure and accepted these expensive loan modifications will not be able to receive assistance through the Department of Veterans Affairs' new relief plan. Veterans forced into expensive loans can't get help “If you're not going to default, this program isn't for you,” VA Home Loan Program Director John Bell told NPR at a press conference this week. “And you have to continue defaulting for a period of time.” In other words, veterans who pay these expensive loans are not eligible. And it seems like that's going to exclude a lot of people. Data obtained by NPR suggests that thousands of veterans received mortgage forbearance and ended up taking out modified loans with significantly higher interest rates.
The fine print of the Veterans Administration's new program also says that if a loan is modified, the borrower must make at least six months of repayments and then be in default for at least three months to qualify. To some policy experts, this does not seem like the right approach. “There's no way a renter should have to pay for six months of bad renovations that they can't afford,” said Steve Sharp of the nonprofit National Consumer Law Center. The rule also means that if a veteran tries to pay for a higher loan modification for several months, then defaults and can't afford to pay, they won't qualify. “Even if you fail to make cost-effective modifications, you should still be able to access VASP,” Sharp said. To give the Veterans Administration time to consider resolving these issues, and to give mortgage companies time to prepare and reach out to homeowners, the VA has announced that the VA deadline expiring at the end of May I think the loan foreclosure moratorium period should be extended.
Still, Sharp said the VASP relief plan should be a big help to those who qualify. “The release of VASP is great news,” he said. “This is desperately needed because people have lacked a reasonable alternative to foreclosure for a long time. … We're very excited.” Secretary of Veterans Affairs Jacobs told reporters that the main difference with the new program is that the VA will own the loans itself, rather than simply guaranteeing loans owned by investors. This would allow VA to set any mortgage interest rate it wants.
“These borrowers can afford to make consistent and affordable payments on the remainder of their loans at a fixed interest rate of 2.5%,” Jacobs said. Back in Rosharon, Texas, Edmund Garcia wonders what's next.
Edmund Garcia stands with his wife, Iris Garcia, inside the home they share with their four daughters. Iris lost her job during the pandemic, and the mortgage company offered them a forbearance.
NPR's Joseph Bui
hide caption
toggle caption
NPR's Joseph Bui
Edmund Garcia stands with his wife, Iris Garcia, inside the home they share with their four daughters. Iris lost her job during the pandemic, and the mortgage company offered them a forbearance.
NPR's Joseph Bui
“I was a little shocked when I heard that I needed to qualify for this program,” Garcia told NPR this week. The Veterans Administration says borrowers should work with and communicate with their mortgage companies. VA Loan Technician If you need help. In Garcia's case, he never actually accepted that higher loan modification. Then, after reviewing the rules, he found out that he needed to qualify as a VASP. But there's a catch. According to the regulations, you will probably be given a 40-year mortgage. It can happen to many other veterans as well. “Eventually I'll be 82 years old,” Garcia says. But he would still be willing to ask for help. “This will be a huge relief to my family,” Garcia said. “And it feels like it's in my arms.”
https://npr.org/2024/04/11/1243921872/the-va-has-its-fix-for-a-home-loan-debacle-but-many-vets-who-got-hurt-wont-get-h Veterans Affairs fixes mortgage failures, but not everyone gets help: NPR
