A disabled Navy veteran stands in front of his foreclosed home.
This article was produced by the investigative reporting workshop at American University in partnership with New America Media.
After the Second World War, returning veterans were welcomed home to two of the most successful government initiatives ever—the Federal Housing Administration (FHA) and Veterans Affairs housing programs—which put millions of them into their own homes for the first time.
Today, later generations of veterans are being confronted by much different housing policies—ones that can toss them out of homes they've bought with their life savings.
John Aguiar is a veteran of the Gulf War, a former intelligence analyst for the Army who took part in Operation Desert Storm in 1990 when US forces brought Saddam Hussein to heel after he invaded Kuwait.
Aguiar and his wife, Syrena, built a house in southwest Florida after relocating from Chicago to be closer her parents. Using proceeds from the sale of their Chicago house, they bought a lot in a new subdivision in Cape Coral, a middle-class suburb across from Fort Myers.
The house they built reflected their values and way of life. It was nothing fancy: a one-story Cape rancher with three bedrooms, two baths, and a two-car garage. There were no granite countertops, no Jacuzzi—just the basics, in keeping with what they could afford. "We always lived within our means," Syrena says. Nor did they see it as a steppingstone to something larger. "It was all we wanted, a place to raise our kids," John says. "We wanted to retire there."
But the mortgage, like so many at the time, contained a ticking time bomb. Their bank had given them an adjustable-rate mortgage, one of the products being aggressively promoted by the deregulated mortgage industry, and soon they were struggling when their monthly payments ballooned. Then Aguiar lost his job in a housing-materials firm when his division was shut down. He cashed out a pension plan from a former employer, drained his 401(k) account, and worked part time at a Home Depot. "We did everything we could to try to hold on to the house," he says. But it wasn't enough.
When their bank refused their appeal to adjust their mortgage payment, foreclosure began and the family soon lost the house. John, Syrena, and their two school-aged children moved in with Syrena's parents. When John still couldn't find work in Florida he took a job with a trucking company in Chicago and moved in with relatives, separated from his wife and children by 1,300 miles.
"We had the American dream," Syrena says, "and it was taken from us."
Not the Only Ones
The Aguiars have lots of company. Veterans have always faced daunting problems in finding jobs, obtaining promised benefits and meeting other challenges when they reenter civilian life. But to those problems has been added the fear of losing their homes. The Fort Myers-Cape Coral region, home to about 60,000 veterans, is a microcosm of what is happening to former service people all over America.
You can hear their stories almost every day at the Veterans Foundation of Cape Coral, lodged in a nondescript, one-story storefront set back from busy Del Prado Boulevard. Three years ago the foundation didn't exist, but escalating problems led a group of former service people to band together and create a center to provide food, counseling, and other help to beleaguered veterans.
"We have guys coming in here as often as you can imagine who are losing their homes and not knowing what to do," says Ralph A. Santillo, president of the group, himself embroiled in a foreclosure case on his own house. "There's a whole group out there in this position, and it is growing."
Just how many veterans fall into this category isn't clear. Veterans Affairs assisted 66,000 who defaulted last year alone just on VA loans. But that number did not include the tens of thousands of other veterans who faced foreclosure on FHA or conventional mortgages that many took out to survive. And of course the number does not include reservists or National Guard personnel who fell behind on payments when they were called up for multiple tours in Iraq, Afghanistan, or both.
While the Cape Coral center provides help to veterans of every era, Santillo said the foreclosure crisis is much worse among older veterans, many of whom have owned their homes for 15 or 20 years.
"They're living on a fixed income, usually just Social Security, sometimes a little pension," Santillo says. "All their costs are going up—insurance, taxes. Most times when people refinanced they used that money just to keep up with their bills and pay their mortgage. So there was no real benefit. It was not like people were going to get rich and live off the money."
Santillo said banks and financial institutions made it so easy to borrow money that a lot of people were trapped.
"There was stuff out there like no-interest loans or loans where you paid 1 percent interest," he says. "Then all of a sudden you find out two years down the road you are paying $5,000 a month. Some of these were usurious. They would have put you in jail for that years ago."
Making matters worse, says Donald Graf, executive vice president of the veterans foundation, is that once veterans encounter financial difficulties, the banks refuse to even discuss a mortgage modification that might make it possible for people to stay in their homes.
"All of us have felt the sting of the banks," he says. "If you had an IRA and you thought that was secure, that was taken away. If you had equity in your house and you thought you could sell it and move into an assisted-living facility with the money, that's gone from you. People are knocking on our door asking for help so we are getting into areas we didn't before."