More than 10,000 veterans have lost their homes since the Department of Veterans Affairs ended a program that allowed them to delay paying their mortgages because of financial hardship, with more at risk of foreclosure, NPR reported.
The Veterans Affairs Servicing Purchase Program, or VASP, was launched in 2024 by the VA to help veterans experiencing severe financial hardship avoid foreclosure and stay in their homes. VA terminated the program last year after lawmakers expressed worries about its cost. Mortgage industry professionals warned at the time that ending it could lead to many veterans losing their homes.
Citing data collected by ICE Mortgage Technology, NPR found more than 10,000 veterans have since lost their homes through foreclosure sales, with another 90,000 currently behind on their mortgages or in the foreclosure process.
Lawmakers last year passed legislation to address the issue. Among other things, they gave the VA Home Loan Guaranty Program – which provides access to VA-guaranteed loans provided by private lenders – the authority to implement a new partial claim option for borrowers experiencing financial hardship. In March, the VA published updates to its Servicer Handbook to incorporate the partial claim option and implement other major changes to its loss mitigation framework.
The American Bankers Association expressed several concerns about the policies the VA proposed and recommended several policy and operational changes to ensure the new loss mitigation and partial claim framework align with other federal housing programs and function effectively in practice. Key recommendations included simplifying the waterfall structure, allowing combined modification and partial claim options, clarifying operational requirements, and providing additional implementation time and guidance for servicers.
The VA plans to finalize the changes by the end of June.
