The End of the VA Forbearance Loans Program and Its Impact on Veteran Families

By: Khadija Coats

What is the Forbearance Loans Program?

At the start of the Covid-19 pandemic, the VA (Veteran Association) Forbearance Loans Program was enacted by Congress. The program sought to defer mortgage payments for veteran families struggling financially, allowing them to keep their homes during the pandemic without difficulties. Their missed payments would be moved to the back of their loan terms to prevent Veteran families from owing much more than they can afford, and families were able to keep payments for 6-12 months. The program ensured that as soon as families were able to financially support themselves again, their original monthly mortgage payments would resume. It was an affordable and alternative way for individuals to start paying their mortgages again with convenient pauses. NPR news reports that “6000 people with VA loans have covid forbearances”.

So what is happening now?

In 2022, the Veteran’s Forbearance Loans program ended, leaving more than thousands of Veteran families frustrated and unsure of what to do. This termination of the program left homeowners with few options. They could either sell their home, lose it to the foreclosure, or wait 4-5 until the new program they were promised begins, and with interest rates drastically increasing through 2022 till now, it is reported by NPR news that “both consumers and industry groups say these homeowners have no affordable path to get back on track”. Their options are limited! Many families are unable to wait and pay the amount they need to catch up. Nor are they able to refinance into another loan for the time being.

With a new program soon on its way, the only thing we can hope for is that this new program is permanent and will relieve Veteran families from the financial burdens they are currently faced with.

Sources:

https://www.npr.org/2023/11/15/1213219040/senators-to-va-stop-needless-foreclosures-on-thousands-of-veterans

https://www.forbes.com/advisor/mortgages/how-would-a-shutdown-affect-my-va-loan/ https://www.npr.org/2023/11/11/1211855956/veterans-va-loans-foreclosure-covid-forbearance