Mortgage professionals warn of a foreclosure wave if no alternative to VASP is introduced
A mortgage relief program that has helped over 17,000 veterans avoid foreclosure is set to end next year, raising alarms among housing advocates, mortgage professionals, and veterans’ groups.
The US Department of Veterans Affairs (VA) announced Thursday that it will phase out the Veterans Affairs Servicing Purchase (VASP) program, a critical tool launched to assist veterans who fell behind on their mortgage payments during the pandemic.
“Beginning May 1, 2025, VA's Veterans Affairs Servicing Purchase Program [VASP]... will stop accepting new enrollees,” the department said in a statement. “This change is necessary because VA is not set up or intended to be a mortgage loan restructuring service.”
In a joint statement, Rep. Mike Bost of Illinois and Rep. Derrick Van Orden of Wisconsin said, “The Trump administration rightfully put an end to VA’s VASP program,” arguing that the program exposed taxpayers to too much risk by requiring the VA to buy delinquent loans and hold them on its books.
They instead support the return of the partial claim structure.
“This action underscores House Republicans' intent to establish a partial claims program at VA to ensure veterans can stay in their homes if they're in financial hardship,” the lawmakers said.
However, during the Biden administration, the VA has maintained it lacks the authority to reinstate a partial claim option without an act of Congress. Although Rep. Van Orden has introduced such legislation, its fate remains uncertain.
The VASP program was introduced as an emergency measure after the VA abruptly ended its partial claim program in 2022, a move that had left around 40,000 veterans in danger of losing their homes. VASP became the VA’s only viable home retention solution for those who could resume payments after temporary hardship, offering new, low-interest, affordable mortgages. According to the VA, VASP has helped 17,109 veterans and their families to date.
But now, as the program winds down, concerns are mounting that the agency has no clear replacement. Veterans’ advocates and industry groups warn that ending VASP without standing up a new solution, such as restoring the partial claim option, could result in a wave of unnecessary foreclosures.
“Without VASP, VA would have foreclosed on tens of thousands of borrowers,” said Elizabeth Balce, speaking on behalf of the Mortgage Bankers Association (MBA) at a recent House Committee on Veterans Affairs hearing. “The short answer is foreclosure. Period.”
The MBA’s president and CEO, Bob Broeksmit, said the loss of VASP without a replacement would be devastating for veterans.
“Halting the VASP program will increase the number of veterans facing foreclosure unless the VA and Congress implement a permanent partial claim option as soon as possible,” Broeksmit said in a statement. “Any characterization of VASP as a ‘lender bailout’ is patently false and entirely inappropriate.”
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Broeksmit emphasized that mortgage servicers had upheld a voluntary foreclosure moratorium while waiting for the VA to provide a viable option, ultimately delivered in the form of VASP.
“The work must start immediately to strengthen the VA’s loss mitigation toolkit, and that includes implementing a permanent partial claim option,” he added.
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