The Department of Veterans Affairs is suspending foreclosures for 6 months for veterans and service members receiving VA loans.
The move follows an NPR investigation that found thousands of veterans who took what’s called a COVID forbearance are now at risk of losing their homes through no fault of their own.
“Helping veterans and their families stay home is a top priority at VA,” VA Press Secretary Terrence Hayes said in a statement. “We are calling on mortgage servicers to suspend foreclosures on VA-guaranteed loans until May 31, 2024.”
The forbearance program was established by Congress after the pandemic to allow people who suffered a loss of income to avoid their mortgage payments for six or 12 months, and then have an affordable way to start again to pay their mortgage.
But in October 2022, the VA ended the part of the program that gave homeowners an affordable way to get current on their loans, leaving many veterans facing foreclosure. The VA has a new program to replace it, but says it will take four or five months to implement.
It is too late to help many of the 6,000 people receiving VA loans who had COVID forbearances and are currently in foreclosure. Another 34,000 are delinquent, according to data firm ICE Mortgage Technology.
After NPR first reported the problem, a group of senators sent a letter to the VA asking it to immediately stop the seizures.
“Without this pause, thousands of veterans and service members could needlessly lose their homes,” Senators Sherrod Brown, Jon Tester, Jack Reed and Tim Kaine, all Democrats, wrote in a letter to VA Secretary Denis McDonough. “That was never the intent of Congress.”
The VA said in its statement that by suspending foreclosures, “we can continue to help veterans with their loans while we launch our new home retention option.” Through the new program, the VA says it will essentially purchase loans from businesses that currently hold them, modify them and then hold them in a loan portfolio owned by the VA.
“This will allow us to work with veterans facing severe financial hardship to adjust their loans – and their monthly payments – so they can keep their homes,” Hayes said in a statement.
VA Undersecretary for Benefits Josh Jacobs said in a separate statement that he encourages any veteran who is having trouble making payments to visit www.va.gov/housing-assistance or call 877-827 -3702.
“At VA, we will do everything we can to help veterans stay home,” Jacobs said.
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