Rep. Kathleen Rice (D-Garden City) is calling on the Department of Veterans Affairs to make it clear that homeowners with VA-backed loans can get flexible repayment plans — and cannot be required to make lump-sum payments — if they fall behind on their mortgages due to the pandemic.
In a letter sent Tuesday, Rice urged Robert Wilkie, secretary of the agency, to “ensure that veterans are fully informed” about the options available to them.
Under the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, homeowners with federally backed mortgages can request up to six months of suspended payments — or forbearance — plus an additional six-month extension if the pandemic is causing financial hardship.
The Department of Veterans Affairs has written that homeowners with VA-backed loans cannot be required to make a lump-sum payment at the end of the forbearance period, and must be offered options such as repayment plans, loan modifications or moving the missed payments to the end of the loan term.
However, Rice said in an interview Tuesday, not all veterans are getting that message.
“I've heard from a lot of veterans that the guidance they are getting about the status of their mortgage, which most have through the VA … is not clear,” Rice said. “They believe that at the end of whatever forbearance period they take, they're going to have to come up with a lump-sum payment, which is absolutely not true.”
Missed mortgage payments on VA-backed loans “do not have to be made up in a single, lump-sum payment by the borrower,” a spokesman for the Department of Veterans Affairs said Tuesday.
Like veterans, borrowers with loans backed by Fannie Mae, Freddie Mac and the Federal Housing Administration cannot be required to make lump-sum payments at the end of forbearance periods, federal officials said.
A spokesman for the Federal Housing Finance Agency, which regulates Fannie and Freddie, said borrowers must be offered additional options like those offered to homeowners with VA-backed loans. For FHA loans, borrowers can convert missed payments into interest-free loans, a senior official with the federal Department of Housing and Urban Development said Tuesday.