Veterans at Risk: Advocates Fear Foreclosure as VA Mortgage Relief Program Ends

Advocates for affordable housing and Democratic members of Congress are raising concerns that an increase in foreclosures might happen soon as the Department of Veterans Affairs Phasing out a mortgage assistance program for economically distressed veterans starts this week.

Starting this Thursday, the VA will cease accepting new participants into the Veterans Affairs Servicing Purchase Program, known as VASP. This initiative was launched last year under the Biden administration to assist veterans facing mortgage difficulties.

“We are deeply concerned,” stated Justin Wiseman, who serves as the vice president for residential policy at the Mortgage Bankers Association—a nonpartisan organization advocating for mortgage firms—during an interview with Romero.my.id.

We prefer not to take action against homeowners, particularly veterans," Wiseman stated. "There’s significant concern that without an alternative plan for VASP, we could see an increase in property seizures.

The Center for Responsible Lending (CRL), which is a nonpartisan, nonprofit group focused on research, policy development, and advocacy for equitable housing, is raising comparable concerns, highlighting in their report that a recent letter To Congress, CRL stated that tens of thousands of veterans could be put at risk. The organization mentioned that with the phase-out of VASP, without an alternative program or solution in place, "many VA loan holders would experience avoidable foreclosures."

To make ourselves perfectly clear, this isn’t just an academic scenario," CRL went on. "By February 2025, approximately 81,000 current service members or veterans had fallen behind on their VA home loans with three or more missed payments, putting them into default status. Unless VASP or similar urgent support measures become available ... numerous homeowners may have no choice but to either sell their properties and relocate or risk losing their homes through foreclosure.

The VA has supported this action, emphasizing that present participants won’t be affected and pointing out other initiatives they provide to assist veterans in obtaining home loans.

Although the VA hasn’t declared plans for replacing VASP, Republican lawmakers in Congress have proposed legislation aimed at establishing an alternate program. This new initiative would enable borrowers facing difficulties to continue receiving federal support.

Republicans offer alternative

The VASP program was unveiled in May 2024. This initiative buys mortgages of financially distressed veterans from external lending institutions and then alters these loans, which includes lowering the interest rates, with the aim of assisting struggling veterans in avoiding foreclosures and evictions. Within just under a year after becoming operational, the VA reports having acquired over 17,000 loans totaling more than $5.48 billion through this program.

In 2022, the VA terminated a previous initiative aimed at assisting veterans' mortgages endangered by the Covid-19 pandemic, leading to the introduction of VASP by the agency.

The discontinuation of VASP occurs as the VA experiences significant staff reductions, with VA Secretary Doug Collins mentioning that around 70,000 agency employees are facing layoffs.

Regarding the conclusion of the VASP program, the VA stated to Romero.my.id, "We must make this adjustment as the VA was neither designed nor designated to function as a mortgage loan restructuring service."

Certain Republican legislators are celebrating the end of the initiative, which they have denounced for cutting interest rates for beleaguered veterans at the cost of taxpayers, and suggesting the establishment of a different program instead.

Illinois Representative Mike Bost and Wisconsin Representative Derrick Van Orden are advocating for the creation of a partial claims program within the Department of Veterans Affairs (VA). This initiative aims to provide homeowners facing financial difficulties with an interest-free loan to cover their overdue payments, with plans to add these costs to the conclusion of their mortgages later on.

"We harbored significant reservations regarding the effect VASP might have on both the future of VA’s home loan initiative and the mortgage lending industry at large," stated Bost, chairing the House Veterans Affairs Committee, along with Van Orden, who heads the Subcommittee on Economic Opportunity, in an address to Romero.my.id.

The Trump administration correctly terminated the VA's VASP program," they stated. "This move highlights the Republican representatives' aim to create a partial claim initiative within the VA to help veterans remain in their homes during financial difficulties while also safeguarding the interests of American taxpayers.

‘Cruel’ and ‘wrong’

Democrats on Capitol Hill are dismayed, saying veterans should have a viable alternative before the VA ends the program. “VA is taking a misstep that will push thousands of veterans into foreclosure,” several Democrats, led by ranking member of the Senate Veteran Affairs Committee Richard Blumenthal, said in a recent letter to Collins.

"This is harsh, incorrect, and goes against the advantages deserved by veterans," they stated.

On Wednesday, Blumenthal and Democratic Senator Lisa Blunt Rochester from Delaware revealed their intentions to propose new legislation aimed at replacing VASP with a system for partial claims.

The VA emphasizes that current enrollees won’t be affected and mentions that various programs are accessible to veterans.

In an email addressed to Romero.my.id, VA press secretary Peter Kasperowicz stated that the phase-out "won’t have any effect on current participants in the program or on veterans who enroll in VASP before May 1, 2025."

Kasperowicz mentioned that the VA still provides "a range of housing aid choices aimed at assisting Veterans," and pointed Romero.my.id towards multiple VA initiatives intended to support veterans in obtaining home loans.

In the meantime, the Veterans of Foreign Wars, a non-profit group dedicated to assisting veterans, has advised its members to take steps before the phaseout occurs.

"As soon as we got the details from VA regarding VASP last week, we alerted our members and audience via our online channels and urged those at risk of foreclosure to contact their lenders before the due date," said Rob Couture, the director of public affairs for the VFW Washington Office, to Romero.my.ida.

The narrative has been enhanced with further information.

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