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The VA home loan debacle continues, and now lawmakers are laying on the pressure

JUANA SUMMERS, HOST:

The Department of Veterans Affairs is scrambling in the wake of a debacle in its home loan program that left many veterans unable to pay their mortgages. After NPR broke the story last year, the VA halted thousands of foreclosures across the country, and now lawmakers are leaning on the VA to fix what's broken because many veterans and their families are still in trouble. Correspondents Quil Lawrence and Chris Arnold report.

CHRIS ARNOLD, BYLINE: The director of the VA's loan program, John Bell, was on Capitol Hill yesterday, trying to explain how the VA is going to fix this mess.

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JOHN BELL: First and foremost, we are looking for a solution to be able to help 40,000 borrowers stave off foreclosure.

QUIL LAWRENCE, BYLINE: But lawmakers on the House Veterans Affairs Committee got frustrated with Bell's answers.

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DERRICK VAN ORDEN: Mr. Bell, you didn't answer that question, and you're really starting to irritate me.

MIKE LEVIN: And as my friend the chairman said, we need answers today.

LAWRENCE: That was Wisconsin Republican Derrick Van Orden and California Democrat Mike Levin, who both praised the home loan as maybe the nation's most important veterans benefit. The VA home loan is part of the GI Bill, and since the end of World War II, it's been giving veterans a leg up into the middle class, like Iraq War vet Edmund Garcia.

EDMUND GARCIA: I did four years before I was shot and wounded, but it was actually - hit me in the ankle and ended my career.

ARNOLD: Garcia's 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 that American dream story. His injury wasn't life-threatening, but he's had 10 surgeries in the years since.

GARCIA: You know, aside from the chronic pain, I'm doing OK, you know? I have my good days, and I have my bad days.

ARNOLD: Garcia and his wife were able to buy a house for themselves and their four kids in Rosharon, Texas, with a loan backed by the VA. When they lost work during COVID, a VA program allowed them to defer mortgage payments. But then the VA scuttled its own program while tens of thousands of vets were still in the middle of it.

LAWRENCE: Vets like Garcia got stranded. Suddenly, he owed all the missed payments at once, upwards of $20,000.

GARCIA: I'm like, how am I going to come up with $22,000? You know, what am I supposed to do? I got four kids. Your options say here that I can do a short sale or deed in lieu. I'm going to lose my home. I said, what am I going to do with my kids?

LAWRENCE: Garcia says he was having this conversation with his mortgage company while he was in his car, waiting to pick up his 16-year-old daughter from school.

GARCIA: I deal with PTSD. I deal with anxiety, and, you know, my heart is beating through my chest. And by the time my daughter is in the car, I have a panic attack right there in front of her. And she's asking, Dad, are you OK?

ARNOLD: The VA says it's working on a fix. That's what the hearing was about this week. It says it's going to roll out a new, affordable loan modification option for the vets who got left facing foreclosure. But in the meantime, veterans tell NPR that their mortgage companies have been pushing them into much more costly loan modifications with today's higher interest rates.

LAWRENCE: And that feels like a bait and switch. The vets were told before they took part in this forbearance program that their payments wouldn't go up. Garcia's old mortgage rate was 2.4%. Now his lender wants him to accept a 7.1% loan, which would raise his payments by $700 a month.

GARCIA: So this is my dilemma - is that you guys have put a financial gun to my head, saying, sign this or else. That's what you're doing.

ARNOLD: Congressman Mike Levin asked about that exact problem at the hearing.

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LEVIN: What if the veterans already signed up for a higher interest rate loan modification? What are you going to do to make these veterans whole?

BELL: So that is why we were - as another part of the loss mitigation waterfall, we wanted to place...

ARNOLD: That was the VA's John Bell, and the long and short of it is that the VA is still working on it.

LAWRENCE: Meanwhile, Edmund Garcia just wants the deal he signed up for.

GARCIA: They said that they were going to keep my payments comparable to what I was paying, and I want them to honor it. They told veterans that they were going to help them in their time of need. I want them to honor it.

ARNOLD: Chris Arnold.

LAWRENCE: And Quil Lawrence.

ARNOLD: NPR News.

(SOUNDBITE OF SLUM VILLAGE SONG, "FALL IN LOVE") Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

NPR correspondent Chris Arnold is based in Boston. His reports are heard regularly on NPR's award-winning newsmagazines Morning Edition, All Things Considered, and Weekend Edition. He joined NPR in 1996 and was based in San Francisco before moving to Boston in 2001.
Quil Lawrence is a New York-based correspondent for NPR News, covering veterans' issues nationwide. He won a Robert F. Kennedy Award for his coverage of American veterans and a Gracie Award for coverage of female combat veterans. In 2019 Iraq and Afghanistan Veterans of America honored Quil with its IAVA Salutes Award for Leadership in Journalism.