The VA Servicing Purchase, or VASP, program was enacted by the Biden administration to help veterans avoid foreclosure by rolling their missed mortgage payments into low-interest loans. But the Trump administration has ended this key lifeline for veterans, and many military and Department of Veterans Affairs advocates are worried it could lead to more veterans foreclosing on their homes.
Cutting the VASP, which has reportedly helped 17,000 vets avoid foreclosure, “leaves millions of military veterans with far worse options than most other American homeowners if they run into trouble paying their home loans,” said NPR. Trump’s decision to slash the program also “comes at a time when nearly 90,000 VA loans are seriously past due, with 33,000 of those already in the foreclosure process.” Given that the average mortgage rate is currently high at almost 7%, according to Freddie Mac, the VASP is “often the only affordable option for homeowners with VA loans.”
Many veterans with these loans have “missed multiple payments and are in danger of losing their homes to foreclosure, according to recent data from Intercontinental Exchange,” said MarketWatch. These loans “make up a relatively small part of the mortgage market, with conventional loans forming the biggest share,” but “resumption of VA-loan foreclosures could result in an increase in overall foreclosure activity by as much as 15% in 2025.”
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Mortgage companies are also warning about what the program’s end could mean. Bankers are “very worried,” said Justin Wiseman, the vice president for residential policy at the Mortgage Bankers Association, to CNN. They “don’t like to foreclose on anyone, and especially not on veterans,” Wiseman said. “We’re very worried that without a replacement program for VASP, there will be more foreclosures.”
Republicans lambasted the program “because, they argued, the VA becoming the loan holder put taxpayer dollars at unacceptable risk,” said Military.com. Despite this, advocates have been “warning the VA that shutting down VASP without replacing it with something else first would result in large numbers of veterans losing their homes,” said NPR.
Democrats have criticized the Trump administration for ending the program, even as they work to find an alternative. The VA is “taking a misstep that will push thousands of veterans into foreclosure,” said Sen. Richard Blumenthal (D-Conn.) in a letter to the Trump administration. Ending the VASP is “cruel, wrong, and runs counter to the benefits earned by veterans.”
What next?
The nonpartisan Center for Responsible Lending, a housing advocacy think tank, also wrote a letter claiming that ending the program means veterans will “face unnecessary foreclosures, and the claims associated with these foreclosures will unnecessarily raise the budgetary cost of the home loan program for the VA.” Many of these “homeowners will be forced to sell their homes and move or face foreclosure, burdening the VA program with claims from foreclosures that could have been avoided.”
Blumenthal and Rep. Derrick Van Orden (R-Wisc.) have presented potential replacement plans. These replacement programs would “help vets struggling to keep their homes by moving their missed payments to the back of their loan term so they would pay them back down the road,” said NPR. But these bills have a long way to go to become law, and between this is a “chasm that could swallow thousands of VA home loans.”
