While Ed O'Connor was in the hospital losing his leg, loan servicers were telling him he might be losing his house too.
O'Connor is a 69-year-old Marine Corps veteran. Last year doctors amputated his right leg — a complication, he believes, of a blood infection he picked up serving in the Philippines. While he was recovering from the surgery, scary letters were arriving at home.
"They were going to do a foreclosure on me," he said. "Being in and out of the hospital, I'm talking on the phone, calling people up. You know, it's hard."
Following an investigation by NPR that found thousands of veterans were about to lose their homes through no fault of their own, the VA called for a pause on foreclosures in its VA home loan program while it rolls out a plan to help. But it now appears that may not be enough for many veterans like O'Connor.
O'Connor is among tens of thousands of veterans who took what's called a COVID forbearance on a VA home loan — in his case because his wife lost her job during the pandemic. That allowed him to defer paying the mortgage and keep his home. Like many vets, he says he was promised he could resume normal payments after six to 18 months when the hardship was over, and simply add the missed payments to the end of the mortgage.
"Add the payments to the end of your mortgage ... your rate won't increase, the payments remain the same," is how O'Connor says it was described to him. "And I said, man, this would be a great relief."
That's not what happened though. Instead, in October of 2022, the VA ended the part of its forbearance program that allowed missed payments to be moved to the back of the loan term. And that suddenly stranded veterans who were still on a forbearance, leaving them with no affordable way to get current on their loans and resume normal payments.
O'Connor says he was told he needed to pay back more than $32,000 in a lump sum to catch up.
"I don't have $32,000!" O'Connor told NPR, as he sat in his new wheelchair at home in Fredericksburg, Va.
After the NPR investigation last month revealed that thousands of veterans were in this same situation, four U.S. senators fired off a letter to the VA demanding an immediate pause in the foreclosures. Just days later, the VA did just that, on Nov. 17. The pause will last through May of 2024, when the VA expects to have a new program in place to help vets avoid foreclosure with a low interest rate loan and payments they can actually afford.
But O'Connor's troubles don't seem to be over, because the VA's rescue plan may exclude many vets who already took what they considered to be their only option to save their homes.
O'Connor is one of an untold number of veterans who ended up with much higher mortgage payments because they were pushed into loan modifications. Those modifications rolled the missed payments back into the mortgage — but with a new loan that had to be at current interest rates, which are about double what they were just two years ago.
"So they upped my mortgage rate," O'Connor said. "And I'm kind of like, wait a minute, you guys are really screwing me here."
"When I got the home, I was only paying $1,750. Now I'm paying $2,400," he said.
O'Connor said he's had to adjust his lifestyle to make the new mortgage payment.
"I make the car payment late, maybe two credit bills late, you know, we don't go to the store that often," says O'Connor, who is trying to stretch his disability check from the VA plus his wife's pay from a part-time job at a shopping mall. He feels betrayed by a program that was meant to help him.
"You know, they give you promises and then they give you an empty cup. I'm just kind of disgusted with it all."
NPR has heard from veterans across the country, from Hawaii to Florida to New York, who all say they, too, are stuck with a much more costly mortgage.
"It doesn't seem quite fair to me," said U.S. Rep. Mark Takano, the leading Democrat on the House Veterans Affairs Committee, in an interview with NPR. "We've got to keep an eye on this."
VA officials say they don't know how many veterans have been pushed into a loan modification that dramatically raised their payments.
But this week at a press conference, NPR asked VA Secretary Denis McDonough about vets in this situation, and he urged them to reach out to the VA.
"There may be bigger policy fixes later, but we want them to be in touch with us now," McDonough said. "We're also concerned obviously to hear that some of our vets feel that they've been misled. So we're looking into that."
Former Marine Joe Mena feels misled.
Mena joined the Marines in 2007 and deployed to Iraq. He served eight years, came home to start a family, then joined the National Guard in time to get called up during the pandemic. After he lost his regular job, he heard about the VA's mortgage forbearance.
"I thought that was, honestly, the coolest thing in the world," says Mena.
Mena says he was told the same thing other veterans recall: Just defer paying, and those missed payments would get shifted to the back end of his 30-year mortgage.
"I was like, I don't mind having a 31-year mortgage, that's fine," he said. "I'm gonna be living in this house forever."
But in September he was told by his mortgage company that the deal had changed.
"They sent me a statement that said that forbearance is up," Mena said. And if he wanted to avoid foreclosure he had to pay $57,000 for the missed payments, or he could do a loan modification.
Mena says he didn't have $57,000. So he says the company placed him into a loan modification that he can't afford. It pushes up his monthly payments by $1,300 per month, to $3,600.
His first payment is due today, Dec. 1. He's working, again as a certified nursing assistant, but he has no idea how he'll be able to keep up with such a big payment.
Mena said he reached out to the VA and others but he's not sure what to do. The stress is a serious issue for him. Mena lost a good friend in a particularly bad way in Iraq and it still haunts him. He's in therapy twice a week for post-traumatic stress.
"I suffer from suicidal ideation constantly. So this is one of the times, this is a type of trigger that would put me in an inpatient facility," he said.
Mena grew up with four siblings, and a single mom who did her best — but they did get evicted from apartments sometimes. This is the first time he's owned a house.
He's exactly who the VA home loan has been intended to help since 1944 – veterans who need a leg up to enjoy the stability that comes with home ownership.
"My one goal is to have a house for my kids," he says. "I'm trying to keep it all together for the kids that I love and my wife that I love very much. But I'm not together at all.
"I wasn't together before I found out about this. And now it's ... I'm losing it," he says.
Mena has three kids and a baby on the way in March. He has no idea if this new program the VA is rolling out is going to help him.
Adding to his confusion, his paperwork appears to show that he is in a trial period for the loan modification. He'd like to back out, and wait for the VA's new rescue plan, but he doesn't know if he can.
Mena's mortgage company, LoanCare, declined to discuss his situation and said in a brief statement to NPR that the company "complies with all applicable laws, regulations, and agency guidelines" for mortgages.
Meanwhile, for the 40,000 homeowners with VA loans who did not get into loan modifications yet, and are currently in the foreclosure process or delinquent, the VA this week released formal guidance related to its pause on foreclosures.
At his press conference, VA Secretary McDonough said his agency has met with companies servicing more than 90% of all VA loans, and that they will comply.
"This will pause the foreclosure process for these veterans through May 31 next year, 2024, giving us the additional time that we need to help these veterans find solutions to stay in their homes," he said.
Still, as of earlier this week that message did not appear to be trickling down to all the people working at mortgage companies.
"I received a call yesterday, come to find out we're officially in the first day of the foreclosure process," Marine Corps veteran Jason Miles told NPR.
Miles served in the Marines for a decade starting in 2003. He did four tours in Iraq, Afghanistan and Syria.
He lost a sales job during the pandemic and had to take a forbearance. These days he's a teacher and a coach at Clinton Christian Academy, a high school in Clinton, Miss.
Miles spoke to NPR from the school's athletic office. He has three kids. His oldest daughter is on a poster for the school volleyball team that's hung on the wall behind his desk.
"I know every dad brags on their kids," he says, clearly proud of her.
But the past few months he's been keeping from the kids that the family doesn't have any affordable way to get caught up on about $20,000 of missed mortgage payments.
"This is horrifying," he said. "I'm scared to death that we're about to lose our home."
Miles told the mortgage company, called Mr. Cooper, that he'd read reports that the VA is pausing foreclosures so families like his could get help. He said the company representative still told him "you have to pay the full amount back or you're going into foreclosure."
After the VA issued its official guidance on Thursday Mr. Cooper said in a statement to NPR, "We are taking immediate steps based on this guidance and look forward to expanded options to support Veterans exiting their pandemic forbearance plans."
The VA said it is encouraging all veterans who are struggling with their mortgage, whether they're in a loan modification already or not, to contact the VA at 1-877-827-3702 or visit the VA website.
LEILA FADEL, HOST:
After an NPR investigation, the Department of Veterans Affairs has halted foreclosures for thousands of veterans who were about to lose their homes through no fault of their own. But it turns out there's another whole layer, people who were pushed into loan modifications they can't afford. It's not clear what the VA is going to do to help them, as NPR's Chris Arnold and Quil Lawrence report.
CHRIS ARNOLD, BYLINE: When the VA halted foreclosures last week, that was a big relief to thousands of veterans who were on the verge of losing their homes. But it might be too little, too late for people like Edward O'Connor.
EDWARD O'CONNOR: You know, they give you promises and then they give you, you know, an empty cup, you know? I'm just kind of disgusted with it all.
QUIL LAWRENCE, BYLINE: O'Connor is 69 years old. He volunteered for the Marine Corps during the Vietnam War. He bought a house in Virginia in 2019 with a loan backed by the VA.
ARNOLD: But when COVID hit, his wife lost her job. And they were going to miss a mortgage payment. Their mortgage company told them, though, that that was OK. They could do what's called a COVID forbearance.
O'CONNOR: She said, well, you know, you sign this, you send it back. We add the payments to the end of your mortgage, blah, blah, blah. You know, your rate wont increase. Your payments remain the same. I said, man, this would be a great relief.
LAWRENCE: But that's not how it worked because a year ago, the VA ended a program that provided the only path for veterans to get current on their loans again and keep their same low-interest rate and mortgage payment.
ARNOLD: When the VA ended that program, that stranded thousands of veterans who were still on a forbearance plan with no affordable way to get current on their loans. O'Connor says he was told that he had to come up with upwards of $32,000 to get caught up.
O'CONNOR: They were going to do a foreclosure on me because they said I had to pay this amount of money. I don't have $32,000.
LAWRENCE: While this was happening, O'Connor was actually in the hospital getting his leg amputated due to a blood infection he says he got while serving in the Philippines.
O'CONNOR: Being in and out of the hospital, I mean, I'm talking on the phone, calling people up. You know, it's hard because you're asking for information - it's home with the house. I don't have it with me. I mean, it's just - it was crazy.
LAWRENCE: We talked to him on a Zoom call. He was wheeling around his house in his new wheelchair. After NPR first reported on thousands of veterans in this situation, the VA halted foreclosures for six months.
ARNOLD: But this is where that whole other layer of complication comes in. It's looking too late for people like O'Connor because in order to avoid foreclosure, O'Connor says he's already been pushed into a loan modification at today's much higher interest rates. They're over 7%.
O'CONNOR: So they up my mortgage rate. So I'm kind of like, wait a minute. You guys are really screwing me here. Beginning, when I got to home, I was only paying 1,750. You know, now I'm paying 2,400.
LAWRENCE: O'Connor says it's hard for him and his wife to afford much besides food and keeping the lights on.
O'CONNOR: Like, I make the car payment late, maybe two credit bills late. We don't go to the store that often.
ARNOLD: NPR has heard from veterans from Hawaii to Florida to New York who are all telling pretty much the same story.
MARK DULAC: I can't pay you 4 grand a month of the money I really don't have. And it's Christmas, for God's sake.
KAREN WHITLEY: I feel like I've been hoodwinked. I feel like I've been scammed almost.
JOE MENA: So, like, I'll have a house, but I won't have lights, I won't have gas, I won't have food for my kids.
ARNOLD: Those were Air Force vet Mark Dulac (ph), Navy vet Karen Whitley (ph) and Marine Joe Mena.
LAWRENCE: VA officials say they don't know how many veterans have been pushed into a loan modification that jacked up their payments. This week at a press conference, we asked VA Secretary Denis McDonough, what about them?
(SOUNDBITE OF ARCHIVED RECORDING)
ARNOLD: Might there be a way to help some of these people who are not, like, right now on the verge of foreclosure, but they ended up in a really bad place, and it wasn't the deal that they were promised?
DENIS MCDONOUGH: For those veterans in a situation like the one you talked about, Chris, we are here now to help. There may be bigger policy fixes later, but we want them to be in touch with us now. We're also concerned, obviously, to hear that some of our vets feel that they've been misled, so we're looking into that.
ARNOLD: Former Marine Joe Mena, who we heard earlier saying it's hard to afford food for his kids - he certainly feels misled.
LAWRENCE: Mena joined the Marines in 2007 when the wars in Iraq and Afghanistan were raging. He served three deployments and then came home to start a family. He lost work during the pandemic, then heard about forbearance.
MENA: I thought that was, honestly, the coolest thing in the world.
ARNOLD: He was told the same thing as others, just defer paying and those missed payments would get shifted to the back end of his 30-year mortgage.
MENA: I was like, I don't mind having a 31-year mortgage. That's fine. Like, I'm going to be living in this house forever.
LAWRENCE: But putting the missed payments to the back - that didn't happen.
MENA: September of this year, they sent me a statement that said that forbearance is up. You're now in foreclosure.
ARNOLD: He says he was told he either had to come up with $57,000 to catch up, which he doesn't have, or do a loan modification. He says his first payment is actually due today, and it's gone up by more than $1,300 a month.
LAWRENCE: Mena lost a buddy in a particularly bad way in Iraq, and it still haunts him. He's in therapy twice a week for post-traumatic stress.
MENA: I suffer from suicidal ideation constantly. So this is one of those times that - this is a type of trigger that would put me in an inpatient facility.
LAWRENCE: Mena says he grew up with four siblings and a single mom, who did her best, but they got evicted from apartments sometimes. This is the first time he's owned a house. And he's exactly who the VA home loan has been for since World War II, veterans who need a leg up into the middle class to help them become homeowners, offer them that stability.
MENA: My one goal is to have a house for my kids. I'm trying to keep it all together for the kids that I love and my wife that I love very much, but I'm not together at all.
ARNOLD: Mena has no idea if this new program the VA is rolling out is going to help him, since he's already been pushed into this new loan modification that he says he can't afford.
LAWRENCE: Mena says he's reached out to VA to ask what he should do next, and he's waiting to hear what they say. VA Secretary Denis McDonough told us, anybody who's stuck in a similar situation should be doing just that. Reach out to them at va.gov/housing-assistance.
ARNOLD: Chris Arnold, NPR News.
FADEL: If you or someone you know may be considering suicide or is in crisis, call or text 988 to reach the suicide and crisis lifeline.
(SOUNDBITE OF YEHEZKEL RAZ'S "BALLERINA") Transcript provided by NPR, Copyright NPR.