VA sends 35,000 veterans ‘erroneous’ warnings about home foreclosure

Thousands of veterans who own their homes with mortgages backed by the Department of Veterans Affairs were stunned recently by a letter from the VA telling them they were at risk of foreclosure, according to members of Congress. Some, if not all, of the letters were sent in error, but the VA has yet to explain to the homeowners or Congress why the letters were sent.

Democrats on the House Veterans Affairs Committee sent a letter this week to VA Secretary Doug Collins asking for an explanation of the “erroneous letters.” A congressional staffer told Task & Purpose that veterans who had called the VA after receiving the letter were told that as many as 35,000 homeowners with mortgages through VA Home Loan programs had received similar letters.

“For many veterans and their families, such a notice can cause significant distress, confusion, and financial hardship—even if issued in error,” Democratic Reps. Mark Takano of California, Chris Pappas of New Hampshire and Nikki Budzinski of Illinois wrote to Collins.

The VA has not explained why the letters were sent or whether any veterans who received one may actually be facing foreclosure. Pete Kasperowicz, press secretary for the VA, told Task & Purpose that the agency will respond directly to the representatives’ letter.

Sean Saball was one of the veterans who got a letter.

“I was thinking like, all right, well, could it be identity theft? Someone opened up a VA home loan using my info, didn’t pay it, or maybe there was an issue with my escrow account. It went negative. Maybe my mortgage company screwed it up,” Saball told Task & Purpose. “I was really worried about it impacting my credit.”

Saball, a former Marine sergeant, served in the Reserves for six years and deployed to Central America. He separated in 2017 and took out a loan through the VA in 2018 to buy a home in Pittsburgh, Pennsylvania.

Last month, he received a letter which stated that a VA loan technician was reaching out “because your loan servicer indicated to us that you are behind on your Department of Veterans Affairs (VA) home loan payments.”

The letter said that borrowers who were “current” with their payments did not need to take action, but for those who had fallen behind, the VA recommended they reach out to their loan servicer. Additional pages had links directing veterans to additional assistance.

Saball opened the letter on a Sunday when neither his bank or the VA was open. He monitored Reddit threads overnight, where he saw other veterans discussing letters they received. On Monday, he called the number on the VA letter. He didn’t get through to a representative but heard a voicemail with a recorded message.

“The message was recorded, and it says something along the lines of ‘if you received a letter, it was a glitch or a mistake, you can disregard it.’”

He also contacted his mortgage company, where a staffer told him they “had no idea” about the letter, but assured him he was up to date on his mortgage payments. He was relieved. He still, however, has not heard directly from the VA.

“I left a message. I have not gotten any follow-ups at all,” he said. “I’m still kind of unsure of what the next steps are and if there’s any action that they need from me.”

The congressional democrats requested an explanation from the VA of how the incident occurred, what steps have been taken to resolve the issue, and how it can be prevented in the future. They also asked that the VA contact each veteran with an explanation and give them an up-to-date summary of their mortgage status.

“In addition to understanding how such a broad error occurred, it is equally important to know whether the reverse problem may have taken place — whether some veterans who should have received accurate foreclosure notices did not receive them at all. If so, this would create a separate and equally serious risk, as veterans might be deprived of the opportunity to act in time to protect their homes,” they wrote.

Foreclosure program

The erroneous letters come after the VA ended a program put in place during the Biden Administration with the goal of helping more than 40,000 veterans avoid foreclosure and stay in their homes.

The program, called the Veterans Assistance Servicing Program, officially ended on May 1. According to a VA website, the program is no longer accepting applications, but loans approved before May 1 will still be honored. Through the program, the VA would purchase defaulted VA loans from mortgage providers and have veterans instead pay off loans with a fixed 2.5% interest rate.

In a statement to NPR about the program’s closure, the VA said it was “not set up or intended to be a mortgage loan restructuring service.”

In their letter to Secretary Collins, Democrats wrote that the “rash” decision left many veterans and families at risk of losing their homes.

“Against that backdrop, the widespread distribution of inaccurate foreclosure notices not only undermines confidence in VA’s loan servicing operations but also places undue emotional and financial strain on veterans who rely on VA for accuracy, support, and advocacy,” they wrote.