The veteran loan calamity

Summary

Planet Money: The Veteran Loan Calamity

NPR’s Planet Money delves deep into a burgeoning crisis threatening the financial stability of thousands of U.S. veterans. Titled "The Veteran Loan Calamity," this episode uncovers how a seemingly beneficial policy meant to aid veterans during the COVID-19 pandemic has spiraled into a nightmare, pushing veterans like Ray and Becky Queen to the brink of foreclosure.

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1. Introduction: A Promising Policy Gone Awry

The episode opens with NPR reporters Quill Lawrence and Chris Arnold arriving at the home of Ray and Becky Queen in rural Oklahoma. What initially appears to be a serene family farm soon reveals the stress of impending foreclosure:

Ray Queen (02:54): "I didn't want to talk to you in the first place... it made me feel a lot better about being about wanting to get this fixed."

Kenny Malone, the host, sets the stage by explaining that a minor tweak in mortgage terms has endangered tens of thousands of veterans' homes—a change that went largely unnoticed until now.

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2. Understanding VA Loans and COVID-19 Forbearance

Background on VA Loans: VA loans, backed by the Department of Veterans Affairs (VA), have historically provided veterans with advantageous home-buying options, including no down payment and favorable interest rates. This support system is likened to having a "very good, very rich friend" vouching for veterans, thereby reducing the risk for lenders.

The Onset of COVID-19: When the pandemic struck, millions lost their jobs, prompting the government to introduce mortgage forbearance—a temporary pause on mortgage payments to prevent immediate foreclosures. Forbearance became a critical tool, especially for those in crisis, allowing them to regroup without losing their homes.

Chris Arnold (05:03): "The whole point of that was, was to buy time for the Department of Veterans affairs to roll out... this program that it was calling VASP."

However, the VA’s handling of the repayment options post-forbearance fell short for veterans holding VA loans.

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3. The Queens’ Struggle: A Personal Story

Ray and Becky Queen utilized a VA loan to purchase their Oklahoma home in June 2021. During the pandemic, facing financial strain due to job loss and family health issues, they took advantage of mortgage forbearance. Initially assured that resuming payments would be straightforward—merely shifting missed payments to the end of the loan—Ray and Becky found themselves cornered when the VA altered repayment options.

Kenny Malone (12:56): "She says that they told her that when it was time to start making her mortgage payments again, nothing would really change. Those missed payments would move to the end of the loan."

Instead, the VA presented them with untenable choices:

1. Lump Sum Repayment: Paying back all missed payments at once—a daunting $22,000.
2. Loan Modification: Refinancing at significantly higher interest rates, doubling their monthly payments.

Quill Lawrence (14:16): "They couldn't afford any of those options."

After months of frustration and numerous calls, Ray and Becky faced the grim reality of foreclosure.

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4. Investigative Reporting: Uncovering the Broader Crisis

Chris Arnold and Quill Lawrence embarked on an investigative journey to understand why VA loans were failing veterans post-forbearance. Their research revealed that while other mortgage-backed entities like Fannie Mae and Freddie Mac smoothly processed repayment options, the VA had abruptly discontinued its primary, affordable repayment pathway.

Chris Arnold (16:00): "The VA basically blew up the on ramp and people couldn't get back."

Their investigation uncovered that up to 40,000 veterans were now on the verge of losing their homes, a stark contrast to the VA’s intended protective role.

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5. The VA’s Delayed Response: Introducing VASP

Under mounting pressure from reporters and concerned senators, the VA eventually introduced the Veterans Affairs Servicing Purchase Program (VASP)—a bailout plan aimed at halting foreclosures by taking over veterans' mortgages and resetting them at a much lower, affordable interest rate of 2.5%.

Kenny Malone (27:42): "The bailout essentially gives the VA the ability to take over the mortgages of veterans like the Queens and then allow the Queens to restart affordable mortgage payments."

This intervention provided a temporary six-month foreclosure moratorium, offering immediate relief to veterans like the Queens.

Ray Queen (24:54): "It sucks that it had to get to this point to get them to do that. But the fact that telling our story... also helps 40,000 other veterans, that's absolutely amazing to me."

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6. The Lingering Crisis: Veterans Still in Peril

Despite the VASP's introduction, a critical gap remained. Veterans who had attempted partial repayments or modified their loans—like Natalie Donaldson—found themselves ineligible for the bailout. These veterans faced exorbitant monthly payments, some up to 50% higher than before, without access to the VA’s new program.

Quill Lawrence (32:08): "Natalie's mortgage company gives her a deadline... she is excluded from this rescue plan."

The VA clarified that VASP was only applicable to those who had fully defaulted on their loans, leaving veterans like Natalie without assistance unless they strategically defaulted—an option fraught with long-term financial repercussions.

Kenny Malone (37:30): "The VA finally did give us a clear answer... they don't have the authority to include people like Natalie in the bailout plan."

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7. Conclusion: An Ongoing Battle for Stability

The episode concludes by highlighting that while VASP has provided temporary relief, it does not comprehensively address the underlying issues faced by all veterans. The VA's inability to extend support to those who partially navigated repayment options underscores a systemic flaw in veteran support mechanisms.

Chris Arnold (34:11): "This is not the way forbearance plans are supposed to work... Something's broken."

As of the episode's recording, the VASP rollout is ongoing, but the crisis remains unresolved for a significant subset of veterans. Ray and Becky Queen, along with thousands like Natalie, continue to advocate for equitable solutions to safeguard their homes and well-being.

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Notable Quotes

• Ray Queen (15:06): "And this is supposed to be a program that you're supposed to help people in times of crisis, not being able to afford their mortgage, so you don't take their house from them."

• Quill Lawrence (35:57): "They say that veterans who are in trouble should reach out to the VA for help."

• Becky Queen (33:46): "I just say please help me to help us too... I want some semblance of what my life was before."

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Final Thoughts

"The Veteran Loan Calamity" is a poignant exploration of how well-intentioned policies can falter without robust implementation and oversight. Through the heartfelt stories of the Queens and Natalie, Planet Money underscores the urgent need for comprehensive reforms to support veterans—a group that has long been deserving of unwavering support.

By spotlighting this crisis, Planet Money not only informs listeners about the economic intricacies of VA loans and forbearance policies but also humanizes the statistics, reminding us of the real lives impacted by financial policies.

Transcript

[Kenny Malone]

This message comes from solidym. Yesterday's approach to storage can't meet the demands of today's AI ambitions. Bigger, faster and more energy efficient Solidigm solid state storage solutions are optimized for AI. Learn more at storageforai.com hey, it's Kenny Malone. Real quick, before the show, I wanted to share three ways to follow NPR's election coverage in the coming days. So up first, you've got up first, that is NPR's morning news podcast. It is recorded before dawn and it is out by 7am Eastern time every weekday. Then you've got the NPR Politics Podcast. That's going to be the place to go whenever you get a news alert or there's big breaking news. You can look for an NPR Politics Podcast episode dropping a few hours after, that kind of thing. And then finally there is Consider this. That is the podcast where NPR covers one big story in depth every weekday evening. So up first in the morning, consider this in the evening. And the NPR Politics Podcast anytime big stuff happens. It's an around the clock election news survival kit from NPR Podcasts. Okay. Thank you for listening. Here's the show.

[Unknown Host]

This is Planet Money from npr.

[Chris Arnold]

This gorgeous farmland out here.

[Quill Lawrence]

Yeah, it's nice.

[Kenny Malone]

Picture a Jeep bouncing along a dirt road in rural Oklahoma.

[Quill Lawrence]

Is that their house?

[Chris Arnold]

What does it say? It's on the right or the left?

[Quill Lawrence]

I think it's on the left.

[Kenny Malone]

These are two of my colleagues, NPR reporters Quill Lawrence and Chris Arnold. And they're pulling up to a house, is that right?

[Chris Arnold]

I think that's right. Yeah.

[Kenny Malone]

Kind of the house, really, that's been at the center of this astonishing and frankly, pretty bizarre problem that has been unfolding over the last couple years. They get out of the car, microphones recording, of course.

[Chris Arnold]

How are you doing?

[Becky Queen]

I'm doing good.

[Unknown Host]

How are you?

[Chris Arnold]

Good. Just, you know, I apologize. Advanced to put microphones in your face.

[Unknown Host]

No, it's fine.

[Kenny Malone]

They're greeted by the homeowners, Ray and Becky Queen. Ray served in the army in Iraq.

[Quill Lawrence]

You got Arabic on your wrist.

[Ray Queen]

Actually, it was done in Iraq.

[Quill Lawrence]

Oh, yeah.

[Ray Queen]

A buddy of mine bought a tattoo machine on the father on. Yeah. Where were you? Liberty.

[Quill Lawrence]

Oh, okay.

[Ray Queen]

That's where we were.

[Quill Lawrence]

Basically Liberty Victory Complex.

[Ray Queen]

That nonsense. Yeah. Yep.

[Quill Lawrence]

That nonsense.

[Kenny Malone]

When Chris first met Ray and Becky Queen, they were about to lose their house because somewhere in some governmental office a decision was made about how to help veterans keep their homes during COVID and it had gone catastrophically wrong.

[Ray Queen]

I didn't want to talk to you in the first place. I'm going to be honest with you, that's just not my my thing. When you told me how many people this affected, I it made me feel a lot better about being about wanting to to get this fixed.

[Kenny Malone]

Hello and welcome to Planet Money. I'm Kenny Malone. Today on the show, we ride along with our colleagues at NPR as they uncover a single change to some like wonky mortgage terms that not many people were paying attention to. The result of that change, tens of thousands of veterans were about to lose their homes because of a policy meant to help keep them in those homes.

[Unknown Advertiser]

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[Kenny Malone]

Is rolling, rolling, rolling.

[Chris Arnold]

Hang on. The AG and Maryland is texting me about something.

[Kenny Malone]

This is the most Chris Arnold way to start an interview. Oh, I'm sorry, the attorney general in another state is texting me about something else. Chris Arnold is a reporter for NPR's investigations team. He has been on the show many times before. And this particular story starts when Chris got a call from a lawyer.

[Chris Arnold]

The lawyer, she was like, look, I got a call from this guy and I don't know if I can help him. His house has already been foreclosed on. Somebody screwed up. He had a Covid mortgage forbearance and the family's like about to be put out on the street.

[Kenny Malone]

Yes, Covid mortgage forbearance. When Covid hit, 20 million people lost their jobs. But we hoped it was going to be a temporary thing. And so Congress said like, hey, look, if you're a homeowner and you're in trouble, you are allowed to to temporarily pause your mortgage payments and not lose your home. That is forbearance. And it's become an important part of the crisis playbook.

[Chris Arnold]

The system, the financial system Learned after the 2008 financial crisis and the foreclosure mess and millions of people losing their homes, it learned that, like, well, everybody wins if you can avoid a foreclosure. Like, the people on the other end that are trying to collect the money win, the neighborhood wins, the homeowner wins. So forbearance comes into play where it's like, all right, well, something happened. I'm in between jobs, so I might not be able to pay my mortgage for three or four months, but I'm getting another job, so just hang with me here, you know?

[Kenny Malone]

Yeah. And even when there is not a crisis, you can usually work with your lender to pause mortgage payments for. For just a few months. With COVID though, the government extended that homeowners were ultimately allowed 18 months of forbearance. However, Chris was hearing that something was going very wrong with that system, and it seemed to be hitting one particular group of homeowners.

[Chris Arnold]

I remember hearing from some lawyers who were, you know, like, people start about to lose their house. They start calling lawyers, and. And they were telling me they're getting a lot of calls from veterans, like. Like something. Something wasn't right.

[Quill Lawrence]

Yeah. So I was out in LA doing a story on homeless veterans.

[Kenny Malone]

Actually, that is Quill Lawrence, our second guide today. Quill covers veterans affairs for npr.

[Quill Lawrence]

And Chris reaches out to me, and he's got some story about veterans losing their homes. And I'm not used to hearing from Chris about veteran stories. He's the mortgage guy.

[Kenny Malone]

So Chris and Quill went searching for somebody who was in the middle of this big problem, somebody who was about to lose their home.

[Chris Arnold]

And eventually I got connected with this couple, Ray and Becky Queen, in Bartlesville, Oklahoma. And I was like, okay, yeah, let's talk to these guys.

[Unknown Host]

This is the. This is the letter that I received, my husband and I received yesterday stating that our home is now in foreclosure. They're starting foreclosure proceedings. It's been.

[Quill Lawrence]

Ray and Becky Queen have four kids. Ray works for a veterans nonprofit. Veterans education stuff. Becky's a social worker. And a few years ago, they moved to Oklahoma for Becky's job.

[Unknown Host]

We purchased the home that we are in now in June of 2021. Babe. June. Ish.

[Ray Queen]

Yeah. We moved here at the middle of June, 20. No. Oh, when we bought the house. Yeah.

[Unknown Host]

Yeah.

[Ray Queen]

So just. And just so you're aware, I have brain damage from my Time in Iraq. And so my memory is absolutely not great. So that's why Becky does most of the talking, because she's basically the memory bank for both of us.

[Kenny Malone]

Ray and Becky were able to buy their home because of one of the key benefits of military service. What's known as a VA home loan. It's a loan that is backed by the Department of Veterans affairs.

[Quill Lawrence]

And these loans date back to World War II. You know, veterans, all the GIs returning from the war, it was a way for them to get a leg up into the middle class. Part of the deal and part of the reason veterans are a protected class is, yeah, because when they come back, you want some stability for them. And so the deal that they get includes, you know, healthcare if they need it, and some benefits for disability like Ray has. And also this really sweet home loan with no money down and a really good interest rate.

[Kenny Malone]

And the Queens are able to get that no money down, low rate mortgage. In part because the Department of Veterans affairs acts as this almost like very good, very rich friend for the Queens. The VA basically says to mortgage lenders, hey, you can lend to the Queens. And we promise one way or another you'll get paid back. And look like this is something the US government does. For most people who buy a home. You've likely heard of Freddie Mac or Fannie Mae, the fha. These are the massively rich friends that back most of the home loans in the US and. And that makes it less risky for banks to make loans and has generally brought mortgage rates down.

[Chris Arnold]

But.

[Kenny Malone]

But yeah. Anyway, it is the Department of Veterans affairs that helped Ray and Becky Queen get the house that they show to Chris and Quill.

[Unknown Host]

And then the kitchen. The kids have not done the dishes, so we'll just ignore that too.

[Chris Arnold]

They gave us a tour of the house and it's like very comfortable. The kids are hanging out, doing their homework, playing video games. I mean, you know, doing stuff outside. It just feels like a place that they've just settled in.

[Ray Queen]

Come here, Blaze.

[Quill Lawrence]

It's nothing remotely grand or ostentatious, but it feels so homey.

[Unknown Host]

I got lots of chickens, much to.

[Quill Lawrence]

Ray's chagrin, on this really cute little farm. It's more farm than house.

[Chris Arnold]

There's this one moment where one of the kids just fires up this four wheeler ATV thing. It's like kid size. And he just goes flying off around this field with a helmet on. He's bouncing around and it just looked like, it looked like so much fun. I was honestly jealous. Like, I want to be Doing that. That looks great. Well, and it must feel good to have, you know, you got a house with some land and your kid can go tearing off on the four wheeler.

[Ray Queen]

And yeah, it wasn't a possibility when I was a kid for multiple different reasons. So it's, it's great that they're able to explore the things that they want to do. He's an engine guy. He's probably going to be an engineer. Smart. At almost 11, he's smarter than I am already.

[Quill Lawrence]

Like Ray said, he was wounded in Iraq and I don't know, in my experience, sometimes it's hard for these folks to find a peaceful spot, but this looks like his peaceful spot to me.

[Kenny Malone]

When Chris first met the Queens, they were about to lose all of that. During COVID Becky and Ray were among the millions of Americans who needed the help of mortgage forbearance. Becky's mom died of COVID Becky had to take extended leave from her job and then lost her job. She called up the company that now handles her mortgage payments and they told her, yeah, you can pause your payments.

[Unknown Host]

So I'm 41 years old and I do my research. I'm not just going to be like, oh, sign me up, I don't have to pay you. Cool. I did my research, I looked into everything. I called numerous, numerous times and every time I was told a forbearance is very simple. It's meant to last short term, up to a year, and at the end of that year, whatever you did not pay is tacked on to the end.

[Kenny Malone]

Right. She says that they told her that when it was time to start making her mortgage payments again, nothing would really change. Those missed payments would move to the end of the loan. So basically, if she missed a year of payments, she would still owe those just like way, way down the road.

[Ray Queen]

The way we were explained it, it would be a fairly simple process. You start making payments again and you're done.

[Kenny Malone]

And to be clear, this is a very normal way to restart payments after forbearance. And the vast majority of homeowners who had trouble during COVID were able to resume making their mortgage payments in some affordable way. But a lot of military veterans with VA loans were not able to do that. When the Queen's forbearance period was up, when they got their repayment options, that simple, affordable version of forbearance where you just move the missed payments to the back of the loan, it was nowhere to be found.

[Chris Arnold]

So they were told they could pay back all of their missed payments all at once. $22,000, which they didn't have, or they could do what's called a loan modification. But rates had gone way up. I mean, mortgage rates had doubled. And that meant if they did a loan mod, that their payments were going to go up by a huge amount.

[Quill Lawrence]

They couldn't afford any of those options. And after arguing on the phone for months with their mortgage company saying this wasn't supposed to be the deal, they eventually realized they're going to be facing foreclosure.

[Unknown Host]

And when I tell you that my heart dropped and like my hands were shaking and honest to God, I, it was scary. I was at work and I ended up, I ended up leaving and telling Ray that, you know, I needed to talk to him before the kids got home from school, because that was not something that the kids needed to hear.

[Chris Arnold]

I mean, when I talked to Ray and Becky Queen, they were very close to foreclosure. I mean, you start getting letters in the mail that say, like, we're going to foreclose on your house. You know, there's not much time left. And they were scared and angry and confused.

[Ray Queen]

And now we're at the point where we've got to figure out what, you know, do we just, do we give up and give in? Do we give up our property and walk away? And this is supposed to be a program that you're, that y'all have to help people in times of crisis, not being able to afford their mortgage, so you don't take their house from them. Like, I don't understand.

[Kenny Malone]

So what was happening? The clock was ticking on the Queen's home. Chris starts calling, like everyone trying to get an answer to what exactly is going on here?

[Chris Arnold]

I can't remember exactly. One thing led to another and I finally found a guy.

[Kenny Malone]

We'll call this person a well positioned source. And Chris wound up talking to a bunch of people to confirm everything. But yes, he found a guy.

[Chris Arnold]

And he's like, I'll tell you what I think is going on. And when he explains it, I'm like, oh my God, like, like that makes sense and it sounds really bad.

[Kenny Malone]

And what that well positioned source explained to Chris was essentially the VA was being a bad rich friend. Because you will recall the VA is supposed to be a good rich friend that vouches for veterans, you know, promises lenders, that ultimately the VA can take the hit if someone stops paying their mortgage. Well now when tens of thousands of veterans took Covid forbearance, they paused mortgages temporarily, but it was up to the VA to decide how those missed payments could eventually be paid back. Like, like, literally to decide what the options would be for those homeowners when they were ready to start paying again. Chris has this. This useful way to picture the whole thing.

[Chris Arnold]

Yeah, I mean, I mean, you kind of think about this way, right? So you're paying your mortgage, you own your house. It's like you're driving along the freeway.

[Kenny Malone]

But then crisis hits, you pause your payments, you're pulling off the highway temporarily.

[Chris Arnold]

Now, when it's time to start paying again, you need an on ramp to get back onto the highway. It appeared that, like loans backed by Fannie and Freddie or FHA or most other loans in America, that is the on ramps were working, but people were getting back on. But something didn't seem to be working with the VA loans.

[Kenny Malone]

Yeah, all those other, you know, rich friend entities, Fannie, Freddie, et cetera, that help people get mortgages, well, they also got to determine their homeowners forbearance repayment options, and those all seemed to be going fine. What Chris's source was telling him was that sometime in October 2022, the VA had stopped allowing the one repayment option that Ray and Becky Queen had thought they were getting, where they pause their payments, restart the payments, and the missed payments go all the way to the back of the loan. It was the VA's one affordable on ramp.

[Chris Arnold]

The VA basically blew up the on ramp and people couldn't get back.

[Kenny Malone]

As Chris and Quill dug into this, they discovered that there were as many as 40,000 veterans now stuck, unable to get back onto that mortgage payment highway. 40,000 veterans that were on the path to losing their homes.

[Chris Arnold]

Yeah, I mean, that was one of the most striking things in all this. Right. It's like veterans are supposed to have better protections than everybody else. What we saw here was most other American homeowners had better protections than veterans. It was the veterans who were getting hurt at the end of this Covid forbearance thing.

[Kenny Malone]

Now, again, the Queens were about to lose their house. They say it was scheduled for the next foreclosure auction. And this next part of the story, Chris and Quill are just sort of running between the Queens and the Department of Veterans affairs just trying to figure out why the VA blew up the on ramp. And so they go to the VA and they ask, why did you do this? Why did you blow up the one affordable option for veterans to start repaying their mortgage? And, and Quill says they were told.

[Quill Lawrence]

Quote, we only had short term authority for that specific program during COVID and this wasn't part of our normal authority. Does that mean anything? It didn't mean anything. Didn't make any sense to me.

[Chris Arnold]

Well, I mean, technically it means something, right? That they thought they had no choice but to turn off this option. But I mean, the thing that doesn't seem to add up or make any sense in that. It's like, you know, when we went to the VA, there were 6,000 veterans on the verge of foreclosure. In the foreclosure process, a total of 40,000 vets headed that direction. I mean, you would think the VA would be jumping up and down saying, like, we've got a serious problem. We have to shut down this thing that's going to strand all these veterans. We need help, Congress, somebody, please. And it wasn't that. I mean, it was like, it seemed like somewhere in a dark room, late at night, somebody pulled the plug.

[Quill Lawrence]

It's bizarre.

[Kenny Malone]

Now, the VA did seem to know there was a problem. To be fair, they said that they, they were working on a new on ramp, if you will, a new way for people to start repaying again by sort of resetting the mortgage to a super low interest rate. But the VA admitted to Chris and Quill that whole thing wasn't going to be ready for months.

[Chris Arnold]

So it was like, oh, there is a raging fire, you know, basically, and they have these fire trucks, but they don't have the wheels on them and the hoses. And that's not all going to be built for like maybe six months from now. So all the houses were going to be burned down before the VA's rescue plan was like on the road. I mean, it just like, this is what, this is what you're doing.

[Kenny Malone]

Chris and Quill go back to Ray Queen, explain all of this. And Ray is like, well, well, if the fix is coming, don't foreclose on us. Like give the fire trucks time to show up.

[Ray Queen]

Let us keep paying towards our regular mortgage between now and then. And then, once the VA has that fixed, then we come back and we address this, the situation that seems like the adult mature thing to do, not put a family through hell.

[Kenny Malone]

Chris and Quill go back to the va, manage to get a sit down interview with the person in charge of the VA loan program, John Bell, and just tell him what Ray said.

[Chris Arnold]

Why put families through hell? He said, if we don't have to, if, you know, if there's going to be help in a few months.

[Ray Queen]

I have never, I haven't said through this interview that, you know, that we aren't exploring all options at this, at this point in time, because we certainly are. We owe it to our veterans to make sure that we're giving them every opportunity to be able to stay in the home.

[Kenny Malone]

In other words, still no help for Ray and Becky and any other veterans about to lose their houses. So this time Chris goes to the airwaves. An NPR investigation has found that thousands of US Military service members and veterans.

[Unknown Host]

Could lose their homes through no fault.

[Kenny Malone]

Of their own, as NPR's Chris Arnold reported. Chris puts all of this reporting into a story, includes the Queen's.

[Chris Arnold]

Ray and Becky Queen are showing us around their farm in Bartlesville, Oklahoma.

[Kenny Malone]

And. And this is where things really start to kind of blow up.

[Chris Arnold]

So, yeah, so this time we do this story and four powerful U.S. senators who had major committees fire off a letter to the va and they were basically like, wtf? What is going on?

[Kenny Malone]

Wtf? Your own, your own language there, I assume not the senator.

[Chris Arnold]

I was not. Yeah, that's not technically what they wrote, but that was the spirit of the.

[Kenny Malone]

Okay.

[Chris Arnold]

Of the letter.

[Kenny Malone]

Chris and Quill would later call up one of those senators, Montana Democrat John Tester.

[Ray Queen]

Don't let this go to your head. It was your coverage that brought this to our attention.

[Chris Arnold]

Thank you.

[Kenny Malone]

Senator Tester is chairman of the Senate Veterans Affairs Committee. So, you know, he's in charge of the committee that oversees the va.

[Ray Queen]

The truth is we have a little more access to them than you do, so we pound on them regularly. We're going to continue to pound on them.

[Kenny Malone]

So, yeah, this, this angry letter from Tester and the other Senators went off.

[Chris Arnold]

To the va and then by the end of the week, the VA actually, you know, hats off, I mean, responded and stopped foreclosures on every single veteran in the United States of America for six months.

[Kenny Malone]

So what did that mean for the Queens in that moment?

[Quill Lawrence]

Yeah, I mean, it means suddenly everyone was safe for at least six months. There's a pause. No one's going to get foreclosed. You know, even for, like I say, veteran stories have a lot of political heft to them and politicians do like to be seen to be doing stuff for veterans. But this is the fastest I've ever seen a story have a real world effect in 30 years.

[Ray Queen]

She just, I just heard her car, so she just.

[Chris Arnold]

Oh, great.

[Kenny Malone]

Yeah.

[Chris Arnold]

Well, wait two seconds.

[Kenny Malone]

Chris called the Queens before news about the foreclosure moratorium had gotten out.

[Chris Arnold]

So. So I heard from the VA tonight at 6:00 on a Friday, but they sent me a statement here and basically it says that the VA is now going to stop foreclosing on anybody with a VA loan for the next six months while they figure out this new program and get it up and running so people in your guys situation can take advantage of it and not lose your house for no reason.

[Ray Queen]

That's awesome.

[Chris Arnold]

Yeah. So I just wanted to tell you guys that and then see like what your take is on. You know what? Because I know every, you guys have been stressed and it's been rough and, you know, Yeah.

[Ray Queen]

I mean, it sucks that it had to get to this point to get them to do that. But the fact that telling our story and getting some sort of justice for what's going on with our problems and everything else also helps 40,000 other veterans, that's absolutely amazing to me.

[Kenny Malone]

Okay. It's been a year since that phone call. After the break, everything is fixed.

[Quill Lawrence]

No.

[Chris Arnold]

No. No way. No, it's not.

[Kenny Malone]

No. Not fixed.

[Ira Glass]

This is Ira Glass of this American Life. Each week on our show, we choose a theme, tell different stories on that theme. All right, I'm just going to stop right there. You're listening to an NPR podcast. Chances are you know our show. So instead I'm going to tell you we've just been on a run of really good shows lately. Some big, epic, emotional stories and some weird, funny stuff, too. Download us this American Life.

[Kenny Malone]

Alexi Horowitz Ghazi here. Sure, subscriptions offer convenience, but are they bad for competition?

[Unknown Speaker]

When you're not canceling because you forget about it or, or it's difficult to cancel, those forces of consumers taking their business to another product are blunted.

[Kenny Malone]

That's from our recent Planet Money bonus.

[Chris Arnold]

Episode, my extended interview with Stanford economist Neil Mahoney.

[Kenny Malone]

Listen with [e-mail] the code switch team spent Election Day talking to folks about.

[Unknown Host]

How the outcome might impact them.

[Becky Queen]

It's a time capsule of people's hopes.

[Unknown Host]

And fears before they knew the results.

[Kenny Malone]

One way or another, there's a change coming.

[Ray Queen]

I wanted to vote for Trump, but I voted for her.

[Chris Arnold]

Gays for Trump.

[Ray Queen]

I cried this morning.

[Becky Queen]

I've been crying on and off. I'm terrified.

[Kenny Malone]

Listen to Code Switch, the podcast about.

[Unknown Host]

Race and identity from npr. Joe Biden's on his way out. Donald Trump's on his way back. Wanna know what's happening as the presidential transition is underway? The NPR Politics podcast has you covered with the latest news and analysis. Listen to the NPR Politics podcast.

[Kenny Malone]

So a foreclosure pause is useful, but the whole point of that was, was to buy time for the Department of Veterans affairs to roll out, you know, this permanent fix. This. This program that it was calling vasp.

[Chris Arnold]

So what VASP is going to do is.

[Kenny Malone]

What does that stand for?

[Chris Arnold]

Vasp, Quill, Veterans.

[Quill Lawrence]

The V has to be Veterans.

[Chris Arnold]

Veterans Affairs.

[Quill Lawrence]

Veterans Affairs Servicing Purchase Program.

[Chris Arnold]

Purchase program.

[Kenny Malone]

Let's call it the bailout plan.

[Chris Arnold]

Good plan.

[Kenny Malone]

So the bailout plan, if you are a veteran who is facing foreclosure, the VA will go to the bank, or more likely, the investors who hold your mortgage, and they will take the mortgage back from them, put it in its.

[Chris Arnold]

Own portfolio of mortgages, like the VA becomes a bank. And then since the VA is the bank, the VA can give you any interest rate it wants. So you could say, Kenny, you got a 2% loan. It's going to be very affordable. Problem solved. Yeah.

[Kenny Malone]

The bailout essentially gives the VA the ability to take over the mortgages of veterans like the Queens and then allow the Queens to restart affordable mortgage payments, specifically at 2.5% for up to 40 years. It lets the VA offer a new on ramp back onto the old mortgage payment highway.

[Chris Arnold]

So, I mean, it is a good. It's a good fix, and it. And it's going to help thousands of people.

[Kenny Malone]

Except we do have one final stop on this story because during their year of reporting, Chris and Quill kept looking at this, this solution, this bailout, and saying, I think there is a huge hole in this VA fix. A big group of veterans getting left out here.

[Quill Lawrence]

So, you know, the thing is, we. We went to see the Queens north of Tulsa. But in the meantime, we'd heard from another veteran who lives in Tulsa, and it didn't look like any of this was gonna help her at all.

[Kenny Malone]

So think we should pull in the dragon?

[Quill Lawrence]

Pull right here.

[Kenny Malone]

Chris and Quill went and visited.

[Chris Arnold]

Hey, how are you doing?

[Kenny Malone]

Hi.

[Becky Queen]

She's friendly, but she's gonna want to check you out before.

[Chris Arnold]

Okay.

[Becky Queen]

Come on, Sigrid.

[Quill Lawrence]

So we met Natalie Donaldson and her pit bull, Sigrid. And she's an army vet. She served as a military police officer. Now she's a schoolteacher, and she bought her house with a VA home loan.

[Becky Queen]

Does anybody want a piece of coffee? Candy? Coffee, Candy.

[Quill Lawrence]

I love these things.

[Chris Arnold]

It's sort of this little cottagey place, and it's really nice. Like, the walls are, like, very solid colors, which makes it kind of stately, and it's neat as a pin. I mean, she is just. The inside is like, everything has a place.

[Becky Queen]

Because when I come in here in the spring, and that's blooming. I'm like, oh, my God, that's beautiful.

[Chris Arnold]

When she showed us around, you could kind of hear how this house and the last few years of her life, which were rough, it's been a rough time, and it's all kind of tangled up together. And at one point, she's like, pointing out to the backyard, I used to.

[Becky Queen]

Have a meadow back there. It was so beautiful. But last spring, my mom had a heart attack. And then my grandpa passed, like a couple months after that. And that meadow did not get the attention that it needed or deserved. So this year I just mowed it all down and I'm starting over, so it's kind of scary back.

[Kenny Malone]

Natalie had a very similar story to the Queens. During COVID She had to stop working to take care of sick family, got forbearance on her VA loan, and then one day gets word that she cannot just start up payments again. Like she thought, like the affordable on ramp she thought that she would have was gone. And just like the Queens, she was instead presented with very bad on ramps back to repayment. And these will sound very familiar. On ramp number one, pay all the money back at once, more than $15,000 in this case.

[Quill Lawrence]

That's a lot of money. And she couldn't do it. And they offered her this mod on.

[Kenny Malone]

Ramp number two, take a loan modification again, basically a whole new mortgage. But interest rates had gone way up.

[Quill Lawrence]

And then Suddenly she's owing 1250amonth instead of $800 a month. And that just. That's a big jump.

[Kenny Malone]

And to be clear here, this is all happening before the foreclosure pause, before that moratorium. So. So these were the only two options, the only two on ramps for Natalie to resume payment and keep her house. Natalie's mortgage company gives her a deadline to decide whether or not to. To take on those higher payments.

[Becky Queen]

Finally, the date has come and gone. And they're calling me. They're calling me every day. And I'm on the phone with the girl. Actually, I was in bed, and I had the stuff spread out in front of me. And she said, you have to sign it. You know, you have to. Otherwise we're going to foreclose on your. On your home. And. And I'm. I'm telling her again, it's not sustainable. I can't do this. I don't know what to do.

[Kenny Malone]

So unlike the Queens, Natalie decided to try somehow to make this loan modification thing work. Suddenly, her monthly payments were 50% higher, and she Picked up every spare piece of work that she could find.

[Becky Queen]

Tuesday I was doing one after school program, Thursday I was doing one after school program and Wednesday I was doing another one. And so I'm just doing all this stuff so that I can make all this money so I can try to pay my house payment. I mean, I just, I was just in survival mode. I just went to work, I came home, I kind of shut down. Like, I just, I can't, I can't do this anymore.

[Kenny Malone]

But she is still somehow doing it. And ironically, it is the fact that Natalie decided to try and make this higher mortgage thing work that is the problem. Because the bailout, the VASP program, it is only for people who have stopped making payments and are headed towards foreclosure, which puts someone like Natalie in a rough spot.

[Chris Arnold]

I mean, so yeah, I mean, what could happen if she strategically defaults? It's called, you just decide I'm going to stop paying my mortgage so I'll get behind and then I'll qualify for the help. But it's like really like you're going to put people through that when you could just give them access to the program?

[Kenny Malone]

Yeah. Strategic default would give some people in Natalie's situation access the bailout program, but it would wreck Natalie's credit and her ability to get a loan anytime soon. And so she's still hustling, still scraping together those way higher monthly payments.

[Chris Arnold]

Oh, you know, one thing, you know, if we are in a press conference with the VA Secretary McDonough, like what would you want to tell him? Like what would you want to say?

[Becky Queen]

I just say please help me to help us too. Maybe all these other people, it's, it's fixed for them and I'm so happy for them. But I want, I need that for myself too. I, I want some semblance of what my life was before I, I did this.

[Kenny Malone]

Chris and Quill have been trying to figure out how many Natalie's there are out there. People who will not be helped by the big bailout plan. But, but probably still need help. So they asked. The VA did not get an answer. And then they foiled a bunch of documents. They, they got a bunch of documents through the Freedom of Information act. And those appear to show that about 3,000 veterans took a loan modification and ended up paying at least 25% more per month. And some paid a lot more. At least a thousand vets ended up with monthly payments that were 50% higher than before. Just like Natalie.

[Chris Arnold]

Yeah, I mean this is not the way forbearance plans are supposed to work, right? I mean, the whole point is someone has to stop paying for a bit. They need to get back on track. So you give them an affordable way to start paying again, but your payment's going up by 50% or more. Obviously something's broken, you know. But so far they're not getting any help from the VA to make it right.

[Kenny Malone]

The Department of Veterans affairs holds these press conferences every month with, with like the person in charge, the head of the VA Secretary Dennis McDonough, and for the last year.

[Quill Lawrence]

Good afternoon.

[Chris Arnold]

Hey, thanks.

[Quill Lawrence]

Can you all hear me? Yep, we got you.

[Kenny Malone]

Basically every month.

[Quill Lawrence]

We'll go to Chris. Good afternoon, Chris.

[Chris Arnold]

Thanks. Quill's on vacation, so you guys stuck with me.

[Kenny Malone]

Chris and Quill have been showing up and asking about VA mortgages.

[Quill Lawrence]

And I think you'll know that I want to ask you about the foreclosures.

[Unknown Speaker]

Yeah. So, Quill, thanks so much. I'm glad that you asked about this question. We anticipated you might not sure why.

[Kenny Malone]

We thought that at the most recent of these press conferences. Thanks, Dan.

[Quill Lawrence]

We'll go to Quill. Thanks very much. This week I was in Oklahoma meeting with a former MP who served in the 90s.

[Kenny Malone]

Will got the chance to ask the VA Secretary Natalie Donaldson's specific question.

[Quill Lawrence]

So she wants to know, what are you going to do to help veterans in her situation who were, as they consider, duped into taking this VA forbearance, which had no on ramp, back onto solvency and the current fix doesn't seem to affect them.

[Unknown Speaker]

Yeah, well, thanks very much for the question, Quill. We are working all that data through. I don't have an answer on your question about similarly situated veterans, and you will be among the first to know, but I don't have any news for you on that right now.

[Quill Lawrence]

Yeah, the VA finally did give us a clear answer in a statement, and it doesn't directly address Natalie, but they said that they don't have the authority, they say, to include people like Natalie in the bailout plan. The bailout plan they are only allowed to use to take over someone's mortgage if they have defaulted on it. And Natalie hasn't defaulted. So they did say, however, that people like that. They did say that veterans who are in trouble should reach out to the VA for help.

[Chris Arnold]

I mean, look, to be clear, the VA did help a lot of veterans through this poll forbearance thing before it went off the rails and before the on ramp got blown up. And when we learned about Ray and Becky Queen and other veterans in their situation. And we exposed this whole thing. They acted very quickly to stop foreclosures on veterans all across the country. So I mean, they seem to be very sincere about wanting to do the right thing and help vets. But since then it just we keep asking them about people like Natalie who ended up in these brutally more expensive mortgages, this group of people like her. And now the VA is saying, well, we don't have the authority to include them in our rescue plan. That sounds like the exact same explanation that they had when we asked them, well, why did you blow up the on rep in the first place? And it's like, well, can't you just ask for the authority? Can't you find a workaround? I mean, there are still thousands of veterans who got hurt here. They didn't do anything wrong. But as it stands right now, you know, they are excluded from this rescue plan.

[Kenny Malone]

As of this recording, the bailout plan VASP has just started to be rolled out. Today's episode was produced by James Sneed. It was edited by Meg Kramer and fact checked by Danya Suleiman, engineering by Sina Lofredo. Alex Goldmark is Planet Money's executive producer. And a very, very special thanks this week to Robert Benincasa and Bob Little. I'm Kenny Malone. This is npr. Thanks for listening.

[Unknown Advertiser]

This message comes from Wondery. Some of the craziest conspiracy theories are actually classified government operations. To hear more about these hidden truths, listen to Declassified Mysteries with Luke lamanna on the Wondery app or wherever you get your podcasts.

[Kenny Malone]

NPR brings you the updates you need on the day's biggest headlines. The Senate narrowly passed the debt ceiling bill that will prevent the country from defaulting on its loans. Stories from across the world. Knowing how to forage and to live with the land is integral to anise culture and down your block.

[Becky Queen]

From CPR news, this is Colorado Matters.

[Kenny Malone]

And you can find all of that and more in your pocket. Download the NPR app today.