VA Pauses Foreclosures on Veterans Facing Difficulties Making Mortgage Payments

A for sale sign stands in front of a house
A for sale sign stands in front of a house, Tuesday, Oct. 6, 2020, in Westwood, Mass. The Department of Justice and the Consumer Financial Protection Bureau are warning mortgage servicers and landlords to heed rules meant to protect members of the U.S. military against foreclosure, eviction and other potential housing-related financial hardships during the pandemic. (AP Photo/Steven Senne, File)

The Department of Veterans Affairs announced that it is pausing foreclosures on VA-backed loans and extending pandemic protections for veterans facing difficulties paying their mortgages.

Officials said Friday that the department will contact mortgage services to pause VA foreclosures and extend the COVID-19 Refund Modification program through May 31, 2024, to ensure that veterans are able to stay in their homes.

The move follows a report Nov. 11 by National Public Radio that found veterans who used the mortgage forbearance program authorized by Congress early in the pandemic were at risk of losing their homes after the VA ended a Partial Claim Payment program that would have allowed them to defer their missed payments to the back of their loan period.

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Instead, when the program ended, they received bills from their mortgage companies for the total payments missed, meaning they faced paying large sums to keep their existing low-interest mortgages or refinancing under today's rates, which are double what they were in January 2022.

According to the NPR report, roughly 6,000 VA homeowners are in the foreclosure process. Another 34,000 are delinquent.

The VA has called for mortgage services to pause foreclosures and will "work with servicers on workable home retention solutions for veterans," according to a department statement.

The extension of the COVID-19 Refund Modification program will allow veterans to obtain zero-interest, deferred-payment loans from the VA to cover missed payments and modify their existing VA-guaranteed loans to create an affordable monthly payment structure.

VA officials said they are establishing a VA Servicing Purchase program that will allow the department to purchase defaulted VA loans from mortgage companies, modify them, and then put them in the VA's direct loan portfolio.

"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," VA officials said in the statement.

The majority of loans described as "VA home loans" are actually VA-backed loans, in which the department guarantees a portion of the loan, ensuring that if a veteran homeowner goes into foreclosure, the lender will recoup some or all of its losses.

The benefits for veterans include better loan terms, such as a more favorable interest rate or smaller to no down payment. According to the department, nearly 90% of all VA-backed home loans are made without a down payment.

Following the NPR report, Senate Democrats Sherrod Brown of Ohio, Tim Kaine of Virginia, Jack Reed of Rhode Island, and Jon Tester of Montana wrote to VA Secretary Denis McDonough calling for a pause and urging him to extend the COVID-era refund program.

"With each additional day that passes, risks mount for borrowers who are facing foreclosure while they wait for a solution from VA. Without this pause, thousands of veterans and service members could needlessly lose their homes,” the senators wrote. "This was never the intent of Congress."

Tester, who serves as chairman of the Senate Veterans Affairs Committee, released a statement Monday praising the VA for its fast response.

"I'm encouraged to see VA answering my call to quickly address this crisis facing our men and women who risked their lives serving this country and were facing foreclosure through no fault of their own," Tester wrote in a statement. "This pause will help ensure our veterans, service members, and their families can remain in their homes and get their payments back on track while VA works on a long-term solution."

VA officials said any veteran struggling with making their mortgage payments should check out the department's housing assistance website or call 877-827-3702.

– Patricia Kime can be reached at

Related: The VA Is Offering Two New Mortgage Relief Programs for Those Impacted by COVID

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