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During COVID, VA told servicers exactly how to help veterans: pause payments, then let borrowers resume normal payments or use low-cost options like deferment—without junk interest, fees, or forced refis. Many veterans say their servicers instead demanded lump-sum payoffs, pushed costly modifications, or slow-rolled loss-mitigation, contradicting VA’s written guidance. Real veterans’ stories and the Cyrus v. PennyMac case show how this played out—and what you can do now to audit your own loan.
What VA Required (in Plain English)
During the pandemic, VA issued step-by-step rules to protect borrowers with VA-backed loans:
No “gotchas” after forbearance. Servicers were to offer deferment—moving all missed principal, interest, taxes, and insurance to the loan’s end date (sale/refi/maturity)—with no added fees or interest, so borrowers could simply resume their old payment. Use the full home-retention “waterfall.” Servicers had to evaluate every affordable option and choose what’s in the borrower’s financial interest—not what yields the highest revenue. Don’t punish borrowers for using CARES Act forbearance. VA warned lenders and servicers not to deny VA benefits or deals just because a borrower used COVID forbearance.
Key documents: VA Circular 26-21-07 (and Change 1); VA Circular 26-20-10 (and Change 2); later 26-24-3 consolidated COVID relief updates through May 31, 2024; in 2024–2025 VA stood up and then wound down VASP, a last-resort rescue program.
What Veterans Reported Happened Instead
Across forums, complaints, and press reporting, a pattern emerges:
“Pay it all now or accept a bad mod.” Veterans describe being told to make lump-sum payments after forbearance or accept a higher-rate modification—precisely what VA said to avoid when deferment was possible. Paperwork purgatory + foreclosure pressure. Borrowers report months-long modification limbo, boilerplate foreclosure notices while “in review,” and repeated document errors. Confusing, shifting rules. NPR/Bloomberg documented that when VA pulled back a key partial-claim option in late 2022 and before VASP launched, thousands were stranded between lump-sum demands and rate-hike mods. Freedom Mortgage specifically. Public complaints echo the same themes for Freedom Mortgage on VA-backed loans during/after COVID (mod delays, payoff confusion, forbearance math).
Why this matters: VA’s own circulars required servicers to consider deferment without tacking on extra interest/fees and to pick the lowest-cost viable path. Steering veterans into more expensive outcomes or conditioning help on lump sums is squarely at odds with that policy framework.
Case Spotlight: Cyrus v. PennyMac (Class Action, D. Conn.)
Allegations: Servicer “bait-and-switch” tactics pushed veterans from COVID forbearance into costlier loans after a deferred-payment option lapsed without adequate notice—leaving veterans to accept higher-rate modifications. The suit survived early defense maneuvers and is moving forward. Why it’s relevant beyond PennyMac: The fact pattern mirrors what many VA borrowers (including those serviced by Freedom Mortgage) describe online: missed notices, confusing “options,” and pressure away from deferment. Courts are now testing those practices against the actual VA rules.
Receipts: Real Veteran Stories (Publicly Posted)
Reddit / r/legaladvice: One post describes a veteran family with Freedom Mortgage whose VA loan forbearance (mid-2020–Nov 2021) was followed by pressure to accept an unfavorable modification, increasing their monthly payments.
Reddit / r/VeteransBenefits: In this thread, multiple veterans report being told to make a lump-sum payment or accept a higher-rate mod, echoing widespread servicing complaints discussed by VA representatives.
CFPB complaint sample: A Freedom Mortgage borrower states, “Freedom Mortgage is not giving me correct information or working with me to modify my VA home loan due to hardship experienced.” (Read complaint on CFPB.gov)
BBB complaint sample: One BBB Complaint cites a VA-COVID modification that dragged on for months, with foreclosure notices during payments and repeated documentation errors.
All linked content represents public consumer accounts, not verified legal outcomes.
What Changed in 2024–2025 (and Why the Fix Remained Incomplete)
By late 2024, the Department of Veterans Affairs had already cycled through multiple “temporary” relief frameworks. VA Circular 26-24-12 (May 29 2024) extended a foreclosure moratorium and previewed the Veterans Affairs Servicing Purchase (VASP) program—a final stopgap meant to buy time for borrowers teetering on the edge. VASP officially launched on May 31 2024, but by March 2025 VA issued Circular 26-25-1, ending new submissions effective May 1 2025. The supposed safety net dissolved just as veterans were still trying to recover from pandemic-era mismanagement.
The 2025 VA Home Loan Program Reform Act (Public Law 119-31)
On July 30 2025, Congress enacted the VA Home Loan Program Reform Act (H.R. 1815), hailed as the most comprehensive rewrite of VA servicing authority since 1944. Among its major provisions:
Partial-Claim Authority: Allows VA to purchase a portion of a delinquent loan and create a junior lien—a tool the agency previously lacked—to prevent foreclosure without forcing a refinance. Mandatory Loss-Mitigation Waterfall: Requires servicers to follow a fixed sequence of options (deferment → modification → refund claim → foreclosure) so veterans aren’t pushed into the most expensive choice first. Direct Payments to Lenders: Permits VA to pay holders “an amount necessary to avoid foreclosure,” modeled after FHA’s claim-curtailment system. Five-Year Pilot Program: Establishes a limited-duration Partial Claim Program to test effectiveness and data reporting. Modernization Measures: Eliminates outdated restrictions (like the ban on veterans paying buyer-broker fees) and aligns VA with FHA / USDA practices.
Why It Still Doesn’t Fix the Past
While the law is progress, it does not retroactively repair the damage done between 2020 and 2025. Implementation will take years, and enforcement depends on future VA rule-making. In the meantime:
The gap remains. The weeks between the VASP shutdown (May 2025) and the law’s rollout left veterans in limbo—precisely when many Freedom Mortgage borrowers were still entangled in costly modifications or foreclosure threats. No automatic redress. The statute does not compel servicers to revisit COVID-era files or refund overcharges. Those harmed must still dispute errors through RESPA §2605 and FCRA §611 processes. Weak enforcement. The law gives VA new tools but not the funding or oversight staff needed to police servicers with long compliance histories. Prospective only. It mainly governs future delinquencies, not those mishandled during the pandemic relief window. Documentation void. Servicers retain broad discretion over record-keeping, meaning misapplied payments and unauthorized mods may never surface without borrower-initiated audits.
Enter the Let Freedom Ring Amendment
That’s where the Let Freedom Ring Amendment steps in. This proposal fills the gaps the 2025 Reform Act left open by:
Mandating Retroactive Review of all 2020-2024 VA-guaranteed loans affected by forbearance, deferment, or modification errors. Authorizing Compensatory Relief for veterans whose servicers violated any VA circular in effect during COVID relief. Creating Accountability Mechanisms — including fines, restitution funds, and public reporting — to ensure servicers cannot quietly rewrite history. Protecting Future Borrowers by embedding these safeguards permanently into the U.S. Code rather than temporary circulars.
The VA Home Loan Program Reform Act is a foundation. The Let Freedom Ring Amendment is the framework that ensures no veteran ever again loses their home because a servicer ignored the very rules meant to protect them.
Action Checklist: Audit Your VA Mortgage in 45 Minutes
Pull your complete loan history (payment ledger + loss-mitigation notes + all “offer” letters). Request from your mortgage company: payment history, escrow analysis, all forbearance/deferral/mod documents, and servicing call logs. Compare your post-COVID path to VA rules: Were you offered deferment (missed PITI moved to the end) without added fees/interest? Did the servicer evaluate all home-retention options and select the lowest-cost feasible one? Were you told a lump sum was required? (Flag this; VA guidance did not require lump-sum repayment when deferment was viable.) Check dates against VA policy windows: If your “bad mod” happened after the partial-claim option lapsed but before VASP existed, note that gap; it’s central to many complaints and to Cyrus–style allegations. If numbers don’t add up, file targeted disputes: Written servicing error notice / info request (RESPA 12 U.S.C. §2605) citing the specific VA circular language that applies to your case. CFPB complaint referencing VA circulars by number and attaching exhibits (still useful for a paper trail, even if resolution varies). If you accepted a costly mod: Ask—in writing—whether a deferment (as described in 26-21-07) was evaluated and why it was rejected; demand the decision logic and underwriting notes. If you’re in active default/foreclosure: Contact a VA loan technician immediately and a consumer-side mortgage attorney; cite the 2024 VA guidance urging foreclosure pauses and the VASP transition period (even though VASP is now closed, the record matters).
Bottom Line
The rules on paper said veterans should land in the least-cost, sustainable option after COVID hardship—often a no-interest deferment to the back of the loan—not a high-rate refinance or modification under pressure. If your path doesn’t match the circulars, it’s time to audit your file and challenge the outcome in writing.
Sources & Further Reading
VA Circulars: VA Circulars Archive
Public Law 119-31 (VA Home Loan Program Reform Act, 2025): Congress.gov Bill Text | White House Press Release
VA VISN Bulletin: GovDelivery VA Bulletin
Urban Institute Analysis: New VA Home Loan Program Reform Act: A Step Toward Helping Veterans Avoid Foreclosure
National Mortgage Professional Coverage: VA Loan Reform Clears Congress
Veterans Affairs Committee Statement: House Veterans’ Affairs Committee Press Release
Cyrus v. PennyMac (D. Conn. Class Action):Bursor & Fisher Case Update
NPR & Bloomberg Reporting: NPR Coverage | Bloomberg Businessweek Coverage
CFPB Complaint Database: Freedom Mortgage Complaints
BBB Complaint Archive: Freedom Mortgage BBB Profile
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