In a move that’s left veterans groups, housing advocates, and thousands of former service members concerned, the U.S. Department of Veterans Affairs (VA) has announced that it will end the Veteran Affairs Servicing Purchase (VASP) program—a key mortgage relief initiative created in response to its own prior missteps during the COVID-19 pandemic.

For many, this decision is more than a policy shift—it’s a potential turning point that could result in tens of thousands of veterans losing their homes.

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What Happened?

Roughly a year and a half ago, during the aftermath of the pandemic, the VA made a sudden and highly criticized decision to end its COVID forbearance relief options, which had allowed veterans to pause their mortgage payments and tack them onto the end of their loan.

The abrupt halt came with no viable alternative, stranding thousands of veterans—many of whom were still recovering financially. Without a clear path to get current on their mortgages, veterans faced foreclosure or were forced to sell their homes.

After significant public pressure and a wave of veteran foreclosures, the VA implemented a stopgap solution: VASP. This program allowed the VA to purchase delinquent loans from mortgage servicers and offer affordable, low-interest payments directly to veterans. With rates as low as 2.5%, it helped more than 17,000 veterans avoid foreclosure.

But now, that lifeline is being pulled.

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When Will the Program End?

According to the VA’s recent announcement on April 3, 2025, the VASP program will stop accepting new applications beginning May 1, 2025.

Their reasoning? The VA states it is “not set up or intended to be a mortgage loan restructuring service.” That has left many wondering: What’s next for veterans still at risk?

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A History of Missteps

This latest announcement marks yet another chapter in a series of mismanaged efforts by the VA surrounding veteran mortgage relief.

To recap:

• During COVID, veterans were offered forbearance—an agreement with lenders to skip payments and add them to the end of the loan.

• In October 2022, the VA abruptly ended the partial claim program, which was the main tool for adding missed payments to the back of the mortgage.

• This left around 40,000 veterans without an affordable way to catch up, leading to a spike in foreclosures.

• VASP was created in response, offering relief to some—but not all—veterans in need.

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Why Veterans Advocates Are Concerned

While the VA says it needs to step back from managing mortgages directly, no alternative relief program has been announced, and Congress has not passed new legislation to replace VASP.

Veterans groups and housing advocates are urging the VA to restore the partial claim option, which is still available to civilians through FHA, Fannie Mae, and Freddie Mac-backed mortgages. That method allows homeowners to move missed payments to the end of their loan term and resume payments—without the government needing to hold the loan.

Elizabeth B., representing the Mortgage Bankers Association, said it bluntly:

“Cutting the VASP program—especially before the VA stands up an alternative—would have one clear result: foreclosure. Period.”

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A Bipartisan Push for a Replacement

Some Republican lawmakers, including Rep. Mike Bost (R-IL) and Rep. Derrick Van Orden (R-WI), have voiced their disapproval of VASP, but support a return to the partial claim system.

They argue it would provide veterans with relief while keeping the loan in the hands of traditional mortgage servicers—limiting government exposure while protecting veterans from losing their homes.

However, the Biden administration has stated that Congress must pass legislation to authorize such changes. Until that happens, the future remains uncertain for those who are still underwater on their loans.

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Resources for Veterans in Need

If you or a fellow veteran is navigating this complex housing situation, there are still resources and trusted advisors who can help.

One of them is David Pekich of VA Housing Education—a veteran and long-time advocate for fair housing solutions. Whether you’re trying to refinance, lower your payment, convert your property into an investment, or just need honest guidance, David can provide clarity and options tailored to veterans.

With interest rates showing signs of decline, now may be a smart time to explore refinancing, especially with VASP coming to an end.

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Final Thoughts

The VA’s decision to end the VASP program without a clear replacement once again puts thousands of veterans in a precarious position. Many are still dealing with the lingering effects of the pandemic and prior policy reversals.

For generations, the VA home loan program has been a powerful tool for building stability and wealth among those who’ve served. But unless the VA and Congress act swiftly to restore or replace critical relief options, that legacy may be tarnished for many.

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💬 What Can You Do?

• Share this article with a fellow veteran or family member who might be affected.

• Contact your Congressional representatives to advocate for the reinstatement of partial claim options.

• Reach out to VA loan experts if you’re unsure about your mortgage options.

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⚠️ Disclaimer:

This article is for informational purposes only and does not constitute legal, financial, or housing advice. VeteransBenefitsHub.com is not affiliated with the Department of Veterans Affairs. Veterans experiencing mortgage distress are encouraged to contact the VA directly or speak with a certified housing counselor or VA loan expert.

More Resiurces about this topic: Militarytimes.com

 

On May 31, 2024, the Department of Veterans Affairs (VA) launched an impactful new initiative, the Veterans Affairs Servicing Purchase Program (VASP). This program aims to support over 40,000 veterans experiencing severe financial hardship, helping them avoid foreclosure and remain in their homes. Let’s take a closer look at how VASP works and why it’s a vital addition to the VA’s comprehensive suite of home retention options.

What is VASP?

The Veterans Affairs Servicing Program (VASP) is a last-resort tool designed to assist eligible veterans, active-duty service members, and surviving spouses with VA-guaranteed home loans. These individuals often face significant financial challenges, and VASP provides a safety net to help them keep their homes.

Through this program, the VA steps in to purchase defaulted VA loans from mortgage servicers, modifies the loans, and places them in the VA’s owned portfolio as direct loans. This allows the VA to work directly with eligible borrowers to adjust their loans and monthly payments, offering a sustainable path to homeownership. Borrowers enrolled in VASP will benefit from fixed 2.5% interest rates, ensuring consistent and affordable payments for the remainder of their loans.

Background and Context

The VASP program was developed in response to challenges that arose during and after the COVID-19 pandemic. Initially, the VA allowed mortgage servicers to provide temporary relief to borrowers through forbearance programs. This included deferring up to 12 months of mortgage payments by adding them to the end of the loan term. However, as the forbearance options phased out, some veterans were left with limited and often unfavorable alternatives, such as paying arrears in full, refinancing at higher interest rates, or selling their homes.

Recognizing the urgent need for a solution, the VA took several months to launch VASP, during which some veterans faced foreclosure or were forced into less favorable financial arrangements. VASP now fills this gap, offering a lifeline to those at risk of losing their homes.

Key Features of VASP

• Eligibility: VASP is available to veterans, active-duty service members, and surviving spouses with VA-guaranteed home loans who are experiencing severe financial hardship.
• Fixed Interest Rates: Borrowers enrolled in VASP benefit from fixed 2.5% interest rates, providing financial stability.
• Loan Modifications: The VA works directly with borrowers to modify loan terms and adjust monthly payments, ensuring affordability.
• Servicer Collaboration: Mortgage servicers identify qualified borrowers and submit VASP requests on their behalf, ensuring a streamlined process.

What VA Leaders Are Saying

According to the VA Secretary, “This new program will help more than 40,000 veterans and their families stay in their homes. We at VA are committed to doing everything in our power to help veterans avoid foreclosure, and that’s exactly why we’re launching VASP—to help the veterans who need it most.”

Josh Jacobs, the Under Secretary for Benefits, echoed this sentiment, emphasizing the program’s role as an additional safety net for veterans. “When a veteran falls on hard times, we work with them and their loan servicers every step of the way to help prevent foreclosure,” he said. “VASP ensures that there is an affordable payment option, even in a high-interest rate environment, so they can keep their homes.”

How to Access VASP

Veterans do not apply directly for VASP. Instead, mortgage servicers review eligibility and submit requests on behalf of qualified borrowers. If you are facing financial hardship, it’s crucial to work closely with your mortgage servicer to explore all available options, including VASP. In some cases, you may need to educate your servicer about the program, as not all may be fully informed.

For additional assistance, veterans can contact the VA Loan Center at 877-827-3702 (Option 4) or visit the VA’s website to learn more about VASP and other home retention programs.

A Cost-Effective Solution for All

The VA anticipates that VASP will result in significant savings—an estimated $1.5 billion reduction in government subsidy spending from 2024 to 2033. These savings stem from the costs avoided by preventing foreclosures, making VASP beneficial for veterans, taxpayers, mortgage servicers, and loan holders alike.

Closing Thoughts

The Veterans Affairs Servicing Program underscores the VA’s commitment to supporting veterans in their times of need. By providing a direct and affordable path to homeownership retention, VASP ensures that veterans can stay in the homes they’ve earned and deserve. If you’re struggling to make your mortgage payments, reach out to your servicer or the VA today to explore your options under this life-changing program.

Together, we can ensure that no veteran faces foreclosure alone. At VeteransBenefitsHub.com, we’re dedicated to keeping you informed about programs like VASP that make a real difference in the lives of our nation’s heroes. Stay connected, stay informed, and let’s take care of each other.