New proposal aims to close gaps in VA's mortgage relief options
The Mortgage Bankers Association (MBA) has voiced strong support for a bill advancing through the House Committee on Veterans’ Affairs that would establish permanent protections for veteran homeowners facing financial hardship.
In a letter sent Wednesday to the House Subcommittee on Economic Opportunity, the MBA warned against the Department of Veterans Affairs’ (VA) planned end to the Veterans Affairs Servicing Purchase (VASP) program, cautioning that doing so without a replacement would “result in more veterans at risk of losing their homes.”
The legislation under review, the VA Home Loan Program Reform Act (H.R. 1815), includes bipartisan amendments that would authorize a “partial claim” program—an option the MBA has long championed. This mechanism would allow the VA to step in and cover a portion of a delinquent borrower’s missed payments, enabling veterans to remain in their homes during times of financial stress.
“We should not repeat the mistakes of the past when a viable VA loss mitigation option was terminated without a replacement,” wrote Bill Killmer, the MBA’s senior vice president for legislative and political affairs. He added that the absence of a sustainable solution would leave “veterans without the options available to all other government-supported borrowers.”
Feedback on new bill
The association noted that the proposed reforms align VA policy with similar initiatives from federal housing agencies, such as the FHA and the Government-Sponsored Enterprises (GSEs). The MBA highlighted key provisions in both the Republican and Democratic amendments that would eliminate interest on partial claims, extend the program’s timeline, and create enforceable standards for servicers.
The MBA also outlined additional recommendations, including clarifying loan guaranty rules to preserve Ginnie Mae eligibility, increasing the claim cap from 20% to 30% of unpaid principal, and allowing multiple claims in cases of recurring hardship.
While largely supportive of the bill, the MBA expressed concern over a Democratic provision granting the VA new statutory forbearance and foreclosure moratorium authority. The association contended that the VA already holds adequate emergency powers and warned that codifying new authority could “create confusion or conflicts” and “increase compliance burdens for servicers.”
Still, the association expresses support for the bill’s goal of enhancing the VA’s loss mitigation toolkit. It also “urges members to vote ‘Aye’ to advance H.R. 1815 to consideration by the full committee.”
“The creation of a permanent partial claim program is a significant and overdue improvement that will benefit both veterans and the broader mortgage market,” the letter stated.
The MBA noted it stands ready to work with lawmakers to refine the proposal and help secure necessary implementation resources.
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