WASHINGTON, D.C. — Thousands of U.S. veterans, many already financially strained, have been pushed into costly mortgage situations due to mismanagement within the Department of Veterans Affairs (VA) COVID-19 mortgage relief program, according to documents obtained by NPR. Instead of receiving the intended support, at least 1,300 veterans now face loan modifications that raised their monthly payments by more than 50%, leaving them in high-cost mortgages with limited options for relief.
The situation began as the VA rolled out mortgage forbearance options during the COVID-19 pandemic, designed to provide temporary relief for homeowners, allowing them to pause mortgage payments without the threat of foreclosure. Veterans turned to the program expecting to defer missed payments to the end of their loan term, under the belief they could later resume paying their original monthly amount.
But in October 2022, as interest rates surged, the VA abruptly ended the option allowing missed payments to be moved to the end of the loan term. This decision left veterans with few affordable options and, in many cases, forced them into costly modifications, significantly increasing monthly payments. Many veterans found themselves unable to keep up with these higher payments, placing them at risk of foreclosure.
Last year, NPR reported on the issue, prompting lawmakers to press the VA, which briefly halted foreclosures and introduced a new rescue plan. However, the current rescue plan excludes veterans who are already on modified high-cost loans or have fallen behind on their modified payments. This leaves many veterans—already financially vulnerable due to these steep payments—without access to lower-cost refinancing options.
Veterans and advocacy groups are now calling for changes to the VA’s mortgage relief policies to prevent further financial harm to those who served in the U.S. military, aiming for a solution that aligns with the original intent of providing support, not additional financial strain.