MARY LOUISE KELLY, HOST:
NPR has been investigating a debacle within the Department of Veterans Affairs that left thousands of vets on the verge of losing their homes. After our first stories aired, the VA halted foreclosures and stood up a rescue program. We can now report that 15,000 veterans have so far been saved from losing their homes and have new affordable mortgages. But there's also a movement in Congress that could kill the rescue program, as NPR's Chris Arnold and Quil Lawrence report.
QUIL LAWRENCE, BYLINE: Kevin and Jenny Conlon live in upstate New York, not too far from where Kevin was stationed with the Army at Fort Drum.
CHRIS ARNOLD, BYLINE: Jenny says they had a young kid and were struggling to pay rent and save money. Getting a VA loan meant that they could buy a house with no down payment. That was 12 years ago.
KEVIN CONLON: Yeah, that's the longest I'd been in one place.
JENNY CONLON: Yeah. And without the VA loan, there was no way that we could have afforded to buy a house, especially the house we're in, the school district that we're in.
LAWRENCE: And Kevin needed that stability. He had served two tours in Iraq, almost back to back. His truck hit multiple roadside bombs that left him with traumatic brain injuries, and his best friend on the second tour died. He saw a suicide bomber and bear-hugged him to the ground, giving his life to protect his buddies. Losing that friend and the survivor's guilt that came with it wounded Kevin Conlon as bad as the bombs.
ARNOLD: He's struggled with PTSD, thoughts of suicide. It's taken him most of the past 20 years to be OK.
K CONLON: I am now. I am now. You know, for a long time, I was not.
J CONLON: It was because of the forbearance, actually. That's why we needed it...
K CONLON: Yeah.
J CONLON: ...So he could go inpatient at a veterans program.
LAWRENCE: Jenny's talking about what's called a mortgage forbearance. Basically, it's a way to stop paying your mortgage when you're having a financial hardship and then have an affordable way to start paying again when you're back on your feet.
ARNOLD: But like tens of thousands of other veterans, the Conlons got stranded when the VA pulled the plug on a key part of the program that had allowed vets to bundle their missed payments up and move them to the back of their loan term to get current. And vets lost that option right as mortgage rates doubled to 7%. So, basically, refinancing wasn't possible either.
LAWRENCE: So the Conlons had been falling farther and farther behind and are very scared about losing this house.
J CONLON: There's nowhere to go.
K CONLON: I joined right after September 11. I was willing to die for what I believed in. And for someone in a position that can take away the home that my family live in? Like, we've paid enough. We've really paid enough.
ARNOLD: When NPR first exposed this problem, there were so many vets in the same boat - about 40,000 - that the VA halted foreclosures across the country for an entire year while it rolled out a rescue program.
(SOUNDBITE OF ARCHIVED RECORDING)
UNIDENTIFIED PERSON #1: Good morning. The subcommittee will come to order. I welcome the witnesses and subcommittee members to today's hearing.
LAWRENCE: At a hearing in Congress last week, it came out that the VA has rescued 15,000 veterans so far from the VA's own mistake.
ARNOLD: That's 15,000 vets and their families that now have a new low-interest loan from the VA that they can afford so they can keep their homes.
LAWRENCE: But there are still a lot of other veterans like the Conlons left waiting to get approved for this new loan program. And some Republicans in Congress want to get rid of it.
(SOUNDBITE OF ARCHIVED RECORDING)
JOHN BELL: This was a last resort option for our veterans.
DERRICK VAN ORDEN: I understand the whole developmental process of this system is moronic.
LAWRENCE: That's Republican Derrick Van Orden interrupting the VA's John Bell, who runs the home loan program.
ARNOLD: Congressman Van Orden doesn't like that this rescue program works by having the VA itself buy these delinquent loans from the mortgage industry. He thinks that's too risky for the VA.
(SOUNDBITE OF ARCHIVED RECORDING)
VAN ORDEN: It gets rid of a bum loan, and it passes it off to the American taxpayers.
LAWRENCE: Van Orden has introduced two bills. One would allow vets who are behind on their mortgages to get current again in a different way - basically, restarting what the VA pulled the plug on a few years ago, stranding all these vets. And pretty much everybody likes that idea - housing advocates and the mortgage industry.
ARNOLD: But Van Orden has another bill, and that one would cap the VA's rescue program - which is called VASP - at just a couple of hundred loans a year, which would basically kill this program. At the hearing, Elizabeth Balce from the Mortgage Bankers Association said that would be a disaster.
(SOUNDBITE OF ARCHIVED RECORDING)
ELIZABETH BALCE: Without VASP, VA would have foreclosed on tens of thousands of borrowers. MBA strongly opposes an arbitrary cap of 250 loans per fiscal year.
LAWRENCE: Balce was asked, with tens of thousands of vets still behind on their mortgages, what would happen if the VASP program was so severely cut back, especially if it happens before the VA stands up an alternative.
(SOUNDBITE OF ARCHIVED RECORDING)
BALCE: Foreclosure.
UNIDENTIFIED PERSON #2: Oh, I mean, that's...
BALCE: Yeah.
UNIDENTIFIED PERSON #2: You know - period.
BALCE: Yeah, period. That's really where it's going to come to. The short answer is foreclosure.
ARNOLD: Meanwhile, Kevin Conlon hopes that Congress doesn't scrap the rescue program before he and thousands of other vets can get current on their loans again.
K CONLON: You're talking about getting rid of something that would keep me and my family in a home that we love, that we need, and to do that to us is just - it's intentionally cruel.
LAWRENCE: All this is happening while the Trump administration is firing thousands of VA employees, which could slow the program down. At the hearing, the VA's John Bell said he couldn't say how many of those firings are in the home loan division, and he had no comment on either of the bills.
ARNOLD: So a lot is up in the air for thousands of vets who don't want to lose their homes.
Chris Arnold...
LAWRENCE: ... And Quil Lawrence, NPR News. Transcript provided by NPR, Copyright NPR.
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