Sarbanes, Maryland Congressional Delegation Express Concern Over Recent Reports of Veterans’ Mortgage Forbearance Issues and Retaliation

FOR IMMEDIATE RELEASE
April 23, 2020
CONTACT: Daniel Jacobs
(202) 225-4016

WASHINGTON, D.C. – Congressman John Sarbanes (D-Md.) and the Maryland Congressional Delegation today expressed concern about recent reports that loan servicers are not allowing veterans with VA Home Loans to access the loan forbearance provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The bill included protection for borrowers with federally backed mortgage loans who are experiencing financial hardships and are unable to make payments due to this COVID-19 crisis. VA Home Loans are covered under this provision.

While servicers are prohibited from forcing lump-sum payments once the forbearance period ends, veterans have reported that servicers have denied their requests, charged additional fees or insisted on lump-sum payments to exit forbearance.

“During these unprecedented times, we must ensure those who sacrificed so much for our nation are being provided for,” the lawmakers wrote. “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.”

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 to help service members purchase homes without excessive down payments or prohibitive credit requirements.

See below for a full copy of the letter.

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April 23, 2020

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,

/signatures/
 

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