(Bloomberg) -- The US Department of Veterans Affairs has asked mortgage servicers to halt foreclosures on veterans through May 2024.
The half-year pause will give the government time to roll out a new program, announced by the White House in October, that will help veterans who are behind on mortgage payments but “who do not qualify for traditional home retention options.”
“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,” a spokesman for the department said in an emailed statement.
The decision to delay foreclosures, announced Friday, comes after a Bloomberg Businessweek investigation found that 4,000 veterans across the country had been foreclosed on, and that 6,000 more were in danger of foreclosure, as they exited forbearance periods designed to ease the financial impact of the Covid-19 pandemic. Several veterans told Bloomberg that paperwork delays by their mortgage servicers had pushed them into delinquency and foreclosure.
Under the forbearance program, borrowers could work out agreements with their servicers to repay the arrears, called loan modifications. For veterans, one potential modification, called a partial claim, allowed them to defer paying those arrears until their mortgage matured. While that program ended in October 2022, the VA said Friday that it would now allow veterans to obtain “a zero-interest, deferred-payment loan” for the duration of the pause.
--With assistance from Ann Choi and Polly Mosendz.
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