January 24, 2008 – Grand Rapids, Michigan – With the problems in the housing market around the country, foreclosures are on the rise. That includes some homes financed with loans through the U.S. Department of Veterans Affairs. But, one activist organization doesn’t think the VA is properly managing those properties.
The Department of Veterans Affairs guarantees some home loans for veterans and members of the military. But if a veteran’s home is foreclosed, the VA is left with the house.
The VA contracts with a private company to manage and sell those houses. A report by the non-partisan Government Accountability Office, or GAO, is critical of how the company manages the properties.
Members of ACORN, the Association of Community Organizations for Reform Now, showed up at a Grand Rapids office of the Department of Veterans Affairs to let them know that they’re not happy. ACORN members said, “This is in reference to the housing stock that the VA owns.”
The Grand Rapids office offers counseling. But ACORN members are upset about a VA contract with a company called Ocwen to maintain and sell foreclosed houses.
The GAO report found the homes were not sold as fast, or for the prices the VA wanted. The report also shows 32% to 46% of properties were not maintained to VA standards for a period of time from 2005 to 2007.
ACORN member Adrianna Jones says she is concerned about the lack of maintenance because, “it tears up our neighborhoods because they’re not fixed up. And they’re torn down. And it brings a lot of blight in the community.”
In the GAO report, Ocwen countered that the VA sometimes focuses on trivial repair items, and that some VA financial calculations are not consistent with industry standards.
ACORN member George Wilson is a Vietnam veteran and knows it can be difficult to adjust to life after the military. He says, “you go there and fight the Vietnam War, and when you come back to the United States you don’t get an equal quality that you served for your country.” He hopes the VA can spend its money on helping veterans, instead of paying to try to maintain houses.
The VA’s contract with Ocwen is up for renewal this year. The GAO report makes some suggestions about possible improvements to the contract.
A statement by VA spokesman Matt Smith says, “…the Department of Veterans Affairs generally agreed with the findings of the Government Accountability Office report regarding actions needed to strengthen VA’s foreclosed property management contractor oversight.”
The statement goes on to say the VA plans to make changes to a new property management contract that will likely be awarded in the next few months. That contract will likely include real time property management data, incentives for good performance, and penalties for poor performance.
WZZM 13 News called Ocwen to get a response, but we have not heard back from the company.
The Department of Veterans affairs issued this statement:
Statement by VA Spokesperson Matt Smith On Property Management Services Contract
In October of last year, the Department of Veterans Affairs (VA)generally agreed with the findings of the Government Accountability Office (GAO) report regarding actions needed to strengthen VA’s foreclosed property management contractor oversight.
As we stated at the time, VA is developing the next solicitation for a new property management services contract. Using a performance-based acquisition strategy, the new solicitation will include the requirement for real-time property management data as well as incentives for good performance and disincentives for poor performance. The VA expects to award the new contract in the next few months.
The VA has aggressively managed the Ocwen contract and is examining poor performance relating to return-on-sale requirements.
The VA needs to point out some serious inaccuracies in ACORN’s statements. Ocwen does not service or foreclose on VA loans. Under Ocwen’s current contract with VA, they only manage and sell VA-owned properties.