The Department of Veterans Affairs is pausing foreclosures on VA-guaranteed loans through May 31, 2024 in an effort to keep financially struggling veterans in their homes.
The agency is also extending its COVID-19 Refund Modification Program through May 31, 2024, it said in a recently released statement.
In the statement, VA said during the pause it “will work with servicers on workable home retention solutions for veterans.”
NPR reported on Nov. 11 that thousands of veterans who used the COVID-19 Refund Modification Program are at risk of losing their homes through no fault of their own. The program allowed participants to defer their missed payments to the end of their loan period.
According to NPR, when the refund modification program ended, some participants were billed by their mortgage companies for the total amount of the payments they missed, leaving them at risk of losing their homes. Nearly 6,000 VA homeowners are in the foreclosure process and another 34,000 are delinquent, NPR reported.
“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,” the VA statement reads. “Through VASP, 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.”
In response to the NPR report, Sens. Sherrod Brown (D-OH) Tim Kaine (D-VA) Jack Reed (D-RI) and Jon Tester (D-MT) wrote a letter to VA Secretary Denis McDonough that urged the pause.
“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,” the letter noted.
"With each additional day that passes, risks mount for borrowers who are facing foreclosure while they wait for a solution from VA,” the letter continued. “Without this pause, thousands of veterans and service members could needlessly lose their homes. This was never the intent of Congress."
Consultant to the Center for Responsible Lending Kanav Bhagat said the foreclosure pause is critically important for giving veteran borrowers a path to avoid foreclosure.
“We now urge VA to ensure that VASP will be broadly available and provide relief that many VA borrowers need, especially in the current high interest rate environment,” Bhagat said in a statement. “The VASP program will give tens of thousands of active-duty servicemembers and veterans the assistance they have earned through their service, allow them to remain in their homes, and avoid foreclosures.”
Any veteran who is struggling with making their payments is urged by VA to go here or call 877-827-3702
Reach Julia LeDoux at Julia@connectingvets.com.
