Press Releases

Kathleen Rice Calls on VA to Protect Veteran Homeowners

Letter asks Secretary Wilkie to clarify that borrowers are not required to make lump sum repayments at the end of mortgage forbearance

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Washington, May 4, 2020 | comments

WASHINGTON – U.S. Representative Kathleen Rice (NY-04) today called on U.S. Department of Veterans Affairs (VA) Secretary Robert Wilkie to issue clarification on the forbearance program available to borrowers with VA-guaranteed home loans during the COVID-19 pandemic to ensure homeowners and veterans who take advantage of this program are not required to make lump sum repayments at the end of a forbearance period. 

The letter comes amidst ongoing confusion regarding the various mortgage repayment options available to borrowers through their mortgage servicers. On April 27, the Department of Housing and Urban Development Inspector General outlined this confusion in a report that found Federal Housing Administration servicer websites provided incomplete, inconsistent, and unclear guidance to borrowers related to their forbearance options under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Federal Housing Finance Agency (FHFA) has already issued a clarifying statement that borrowers with mortgages backed by Fannie Mae or Freddie Mac do not need to pay back missed payments from the forbearance period in a single lump sum. 

“Despite protections established in the CARES Act, I have heard from too many veterans and homeowners who are concerned they will be required to repay their mortgage payments in a lump sum when their forbearance period comes to an end,” said Rep. Kathleen Rice. “The VA must provide clear and strong clarification so there is no doubt about the variety of repayment options available to borrowers. Our nation’s veterans should not be burdened with navigating a confusing forbearance process during this crisis.” 

The full text of the letter can be found below: 

The Honorable Robert Wilkie
Secretary
Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, DC 20420

Dear Secretary Wilkie:

I write to you regarding the protections provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act for borrowers with VA-guaranteed home loans. I appreciate the guidance VA has issued on the forbearance and repayment options available to homeowners and veterans experiencing financial hardship due to the COVID-19 pandemic. To address any ongoing confusion among borrowers and mortgage servicers, I encourage you to take further action to clarify that borrowers who take advantage of this program are not required to make lump sum repayments at the end of a forbearance period.

The CARES Act allows borrowers with federally backed mortgage loans to request mortgage forbearance for up to a year if they experience financial hardship due to the COVID-19 emergency. Pursuant to existing federal guidance, those borrowers who seek forbearance will be contacted by their mortgage servicer about 30-days before the end of the forbearance plan to discuss a variety of repayment options. This includes repayment plans, adding payments to the end of the mortgage, or setting up loan modifications that reduce monthly payments. The guidance also states that missed payments due at the end of a forbearance period do not have to be made up in a single lump sum payment.

Despite guidance issued by VA and others, there has been ongoing confusion about the various repayment options available to borrowers through their mortgage servicers. On April 27, the Federal Housing Finance Agency (FHFA) released a statement to combat ongoing misinformation and reiterated that borrowers in forbearance with mortgages backed by Fannie Mae or Freddie Mac are not required to repay missed payments in one lump sum. On the same day, the Department of Housing and Urban Development (HUD) Inspector General released a report that found Federal Housing Administration (FHA) servicer websites provided incomplete, inconsistent, and unclear guidance to borrowers related to their forbearance options under the CARES Act. The Inspector General concluded that without clear and consistent guidance from servicers and enforcement of the federal guidance, struggling homeowners will be unable to make informed decisions about mortgage payments and relief that may be available to them.

We must ensure that homeowners and veterans are protected both during and after this national health emergency. The mortgage system can be difficult to navigate, and homeowners are now faced with navigating the forbearance process during a time of crisis. Therefore, I urge you to take additional steps to ensure that veterans are fully informed about available options for mortgage relief and clarify that borrowers with VA-guaranteed home loans are not required to make lump sum repayments at the end of a forbearance period.

Sincerely,

 

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