Maryland Delegation Members Express Concern Over Recent Reports of Veterans’ Mortgage Forbearance Issues and Retaliation During COVID-19 Crisis
U.S. Senators Chris Van Hollen and Ben Cardin and Congressmen Anthony G. Brown, Steny H. Hoyer, C.A. Dutch Ruppersberger, John P. Sarbanes, David Trone and Jamie Raskin (all D-Md.) wrote to United States Secretary of Veterans Affairs Robert Wilkie to express concerns that loan servicers are not allowing veterans with VA Home Loans to access forbearance relief during the COVID-19 crisis. The CARES Act included protection for borrowers with federally backed mortgage loans who are experiencing financial hardships and are unable to make payments due to this crisis. VA Home Loans are covered under this new law.
While servicers are prohibited from forcing lump sum payments once the forbearance period ends, veterans are reporting that servicers are unacceptably denying their requests, charging additional fees or insisting on lump sum payments to exit forbearance.
In 2019, more than 15,000 veterans in Maryland have VA Home Loans. Another 7,000 loans have been issued so far in 2020. The VA Home Loan program was created as a means to assist service members in purchasing homes without excessive down payments or prohibitive credit requirements.
“During these unprecedented times, we must ensure those who sacrificed so much for our nation are being provided for,” wrote the lawmakers. “We must protect veterans from opportunistic and errant lenders. This is an invaluable program and we want to ensure the program remains strong for many years to come.”
Read the full letter below.
Dear Secretary Wilkie:
We are writing to express concern over the availability of forbearance as an option for veterans with VA Home Loans. While the CARES Act covers these individuals, we are concerned loan servicers are not complying.
In 2019, more than 15,000 veterans in Maryland received a VA Home Loan. Another 7,000 loans have been issued so far in 2020. The VA Home Loan program was created as a means to assist service members in purchasing homes without excessive down payments or prohibitive credit requirements. These loans, backed by the Department of Veterans Affairs, became increasingly important after the housing market collapse as lenders tightened standards even more.
The coronavirus has brought unprecedented challenges for families across America. Six in ten Americans state their household income has been negatively impacted by COVID-19, with up to 80 percent concerned about paying bills in the coming months. In order to provide assistance during this time of need, Congress passed the CARES Act. Among many things, this legislation included protection for borrowers with federally backed mortgage loans who are experiencing financial hardships and are unable to make payments due to this crisis. VA Home Loans are covered in this category.
We appreciate the Department issuing Circular 26-20-12 on April 8, 2020. As stated in the circular, forbearance is an option available for VA Home Loan borrowers. Additionally, it is clear servicers shall not force lump sum payments once the forbearance period ends. While expressly outlined, it has been brought to our attention that servicers are not complying with these guidelines. Reports have come back that servicers are denying borrowers requests, charging additional fees, or insisting on lump sum payments to exit forbearance. This is unacceptable and not in compliance with the new legislation.
During these unprecedented times, we must ensure those who sacrificed so much for our nation are being provided for. Please provide an outline of your strategy to increase lender and borrower education on the CARES Act provision forbearance guidelines. Additionally, we request information on how the Department plans to hold servicers accountable. We must protect veterans from opportunistic and errant lenders. This is an invaluable program and we want to ensure the program remains strong for many years to come.
On behalf of Maryland veterans, we thank you for your prompt attention to this important issue.
Sincerely,