Iraq War veteran Edmund Garcia drapes an American flag over his shoulder in front of his home in Rosharon, Texas, on Thursday.
NPR's Joseph Bui
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Iraq War veteran Edmund Garcia drapes an American flag over his shoulder in front of his home in Rosharon, Texas, on Thursday.
NPR's Joseph Bui
Lawmakers called John Bell, director of Veterans Affairs' loan programs, to Capitol Hill this week to discuss how the agency plans to resolve a debacle that has put many veterans at risk of losing their homes. I asked him to explain.
His answer: “They don't know yet.”
“We are looking for a solution that will allow 40,000 borrowers to avoid foreclosure,” Bell told them.
The Veterans Administration continues to be in turmoil as an NPR investigation reveals VA pulled the plug on critical programs even as thousands of veterans are still active. In effect, a well-intentioned pandemic relief effort has turned into a bait-and-switch trap for homeowners. .
At issue is the so-called moratorium on mortgages due to the coronavirus. The program, created by Congress to help people who lost income after the onset of the pandemic, offers homeowners with federally backed loans an authorized way to skip mortgage payments. provided. Missed payments are rolled up toward the end of the loan term, allowing homeowners to resume regular payments once they're back on their feet.
Iris Garcia, left, looks on as her husband, Edmund Garcia, listens on the phone to a call from the Department of Veterans Affairs regarding their family's finances.
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Iris Garcia, left, looks on as her husband, Edmund Garcia, listens on the phone to a call from the Department of Veterans Affairs regarding their family's finances.
NPR's Joseph Bui
But in October 2022, the Veterans Administration abruptly ended a key part of the forbearance program, leaving tens of thousands of veterans stranded who were told they had to pay all their outstanding balances at once.
“How are we going to finance it…almost $23,000? How are we going to finance it?” asks Iraq veteran Edmund Garcia.
Garcia's wife lost her job during the pandemic, and when she called a debt collector in late 2022, she was offered a reprieve. Three months later, Garcia said, she tried to start paying again but was told the program had ended. The mortgage company said it would not be able to resume regular monthly payments unless it could afford to pay off all the arrears at once. So he retreated further. And just a few weeks ago, he was notified that all his past due payments were coming due.
Edmund Garcia, an Iraq war veteran, listens in his earphones as he receives a call from the Veterans Administration about his home's financial situation.
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Edmund Garcia, an Iraq war veteran, listens in his earphones as he receives a call from the Veterans Administration about his home's financial situation.
NPR's Joseph Bui
“I know, what can I do?” Garcia said. Documents from his lender said one of his options was to sell his home in a short sale. “We're going to lose our home. What are we going to do with our kids?” he says.
After NPR first reported on the issue last November, lawmakers sent a letter to the Secretary of Veterans Affairs and foreclosures on VA loans were immediately halted. The deferral is expected to last six months, after which it will have a solution in place to allow veterans to resume making affordable mortgage payments, the VA said.
Meanwhile, many veterans say debt collectors are still forcing them to either pay all outstanding balances immediately or accept expensive loan modifications.
Garcia is a first-generation American. His parents are from Honduras. He was the first in his family to go to college, and joining the military was supposed to be part of the American dream story, he said. Veterans Home Loans are part of the GI Bill, and since World War II, they have given veterans the opportunity to advance into the middle class.
Edmund Garcia's keys hang from a Honduran flag key chain.
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Edmund Garcia's keys hang from a Honduran flag key chain.
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Garcia served four years, including combat with the Army's 101st Airborne Division in Iraq, before being shot in the ankle and ending his military career. Although his injuries were not life-threatening, he suffered quite serious injuries. Since then, he has had 10 ankle surgeries and still has screws and plates in his foot.
“You know, other than the chronic pain, I'm fine. I have good days and I have bad days,” he says.
Garcia, his wife, and their four daughters live south of Houston in a home they bought with a veterans mortgage. Just two weeks ago, he was driving to pick up his 16-year-old daughter from school and was on the phone with his mortgage company when the company demanded payment in full.
“I struggle with PTSD, I struggle with anxiety, and my heart was pounding in my chest as I was having this conversation,” he says. “Her daughter is in the car…After I hung up her phone, I had a panic attack right in front of her daughter. And her daughter was asking, 'Dad, are you okay?' Masu.””
A photo on Edmund Garcia's refrigerator.
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A photo on Edmund Garcia's refrigerator.
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Garcia said it feels like a bait-and-switch, as he and other veterans were told before they entered the forbearance program that their pay would not go up.
If you are unable to pay off all missed payments, you will be offered a loan modification that will result in a higher monthly bill. Garcia's previous mortgage rate was 2.4%. The proposal would increase your payments by $700 per month and increase the percentage to 7.1%.
“Here's my dilemma,” Garcia reportedly told a mortgage loan officer over the phone. “You guys have put an economic gun to my head saying sign this or else.”
Mr. Garcia's lender, a company called Mr. Cooper, said in a statement to NPR that the company is “bound by programs offered by the VA” and that “the industry is now looking for enhanced VA loss mitigation solutions.” said.
Iris and Edmund Garcia in the home they bought with a veterans mortgage.
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Iris and Edmund Garcia in the home they bought with a veterans mortgage.
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How the Veterans Administration plans to improve options for veterans in this distressed state was the focus of a congressional hearing this week.
“We need answers today,” said Rep. Mike Levin, a California Democrat and ranking member of the House Veterans Affairs subcommittee.
Representative Mike Levin, D-Calif., arrives at the U.S. Capitol on April 20, 2023.
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Representative Mike Levin, D-Calif., arrives at the U.S. Capitol on April 20, 2023.
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Bell, director of the Veterans Loan Program, said these 40,000 veterans will receive assistance from a new loan modification program called the Veterans Services Purchase Program (VASP).
“VASP provides veterans with affordable, scheduled monthly mortgage payments that reduce their debt over time at interest rates that are significantly lower than current market rates,” Bell said.
But aside from the thousands of veterans who are on the verge of foreclosure and are behind on their loans, Levin said, what will happen to those veterans who already end up taking out far more expensive mortgages as a result of the Department of Veterans Affairs action? I wanted to know.
“What if the veteran has already signed up for a high-interest loan modification?” Levin asked. “What are you going to do to uplift these veterans?”
On November 14, 2023, Congressman Derrick Van Orden (R-Wis.) leaves a meeting of the House Republican Conference at the U.S. Capitol.
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On November 14, 2023, Congressman Derrick Van Orden (R-Wis.) leaves a meeting of the House Republican Conference at the U.S. Capitol.
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Bell said it's unclear whether the VA has determined whether veterans must first become delinquent on their current mortgages, but said it's “possible” they would qualify.
Representative Derrick Van Orden, Republican of Wisconsin, expressed frustration with Bell's response.
“Mr. Bell, you're not answering that question and it's starting to get really frustrating,” Van Orden said. He also expressed concern about the potential costs and unintended consequences of the Veterans Administration's new VASP program.
Also at the hearing, industry and consumer groups urged the Veterans Administration to reinstate some of the loan forgiveness programs that were discontinued in October 2022. This allowed lenders to bring the unpaid amount forward to the end of the loan term.
“All other federal mortgage programs offer this option,” said Housing Policy Council Chairman Edward J. DeMarco.
