While veterans are directly impacted, expert believes effects could trickle through the market
With the Trump administration set to terminate more than 80,000 Veterans Affairs (VA) employees, an expert believes that the effects of these job losses and potential changes to VA loans may reverberate throughout the housing market.
George Carrillo, CEO of the Hispanic Construction Council (HCC), told Mortgage Professional America the reduction in staffing will impact brokers' ability to get VA loans over the line.
“With fewer personnel available to process applications, veterans could experience slower loan approvals,” Carrillo said. “This also leads to delays in closing dates and missed opportunities to lock in favorable interest rates.”
The VA issued a memo in early March that called for the layoff of at least 76,000 employees. VA chief of staff Christopher Syrek sent the memo, which calls for a return to 2019 staffing levels of 399,957 employees, according to the Associated Press. The organization had 479,000 employees prior to the layoffs.
According to the AP, the VA achieved its highest-ever service levels in 2024, serving more than nine million enrollees and providing over 127.5 million healthcare appointments.
Changes to the VA Home Loan Program could also have a big impact
The downsizing at the VA isn’t the only issue impacting veterans in the housing market. Congress is debating changes to the VA Home Loan Program, which could limit lending options for veterans.
The chairman of the House Committee on Veterans’ Affairs, Mike Bost (R-IL), introduced legislation that would cap the number of direct loans the VA can repurchase. He stated that the VA Service Purchase Program (VASP), which enables the VA to purchase delinquent loans and modify them, poses a threat to the long-term stability and viability of the program.
“If the Biden version of VASP is allowed to continue, I fear that the home loan will not exist in the future for my fellow veterans,” Bost said. “I believe that if we don’t change VASP, this program will continue to be a Trojan horse on VA’s books that could ruin the VA home loan program forever.”
Bost suggested a partial claim program that would allow veterans facing financial hardships to defer missed payments without immediately facing foreclosure.
Opponents believe the bill may limit critical loan assistance for veterans. Carrington Mortgage Services executive Elizabeth Balce, on behalf of the Mortgage Bankers Association (MBA), testified that the bill may make it more difficult for veterans to take advantage of VA loan benefits.
“First, the bill must clarify that a partial claim does not reduce the VA guaranty on the first mortgage,” Balce said. “If a partial claim is deducted from the 25% loan guaranty, lenders will be left with little to no remaining coverage, increasing risk and making VA loans less competitive in the market. This could reduce veterans’ access to VA mortgages.”
VA cuts may impact the entire housing market
Carrillo thinks it won’t just be veterans affected by these VA job cuts and loan changes.
“This ripple effect doesn’t stop with veterans,” Carrillo said. “Real estate agents, mortgage bankers, brokers, and buyers are all feeling the pinch. Transactions become harder to coordinate, timelines are more difficult to maintain, and competitive housing market dynamics only add to the pressure.”
VA loans are one of the most misunderstood loan products, even by brokers and the veterans who are eligible to use them. Mortgage expert Cathy Jordan told MPA that misconceptions about these loans keep veterans from fully using their benefits. Agents often advise potential VA borrowers to consider alternative types of mortgage loans.
“There is no consideration for the unnecessary costs to the veteran, like a down payment requirement, mortgage insurance, and other unnecessary fees,” Jordan said.
Mortgage expert Cathy Jordan discusses the impact of recent changes on veterans using VA loans. She stresses the importance of updating VA policies and addressing misconceptions to ensure veterans can afford homeownership. https://t.co/LlZfwh87FJ
— Mortgage Professional America Magazine (@MPAMagazineUS) March 26, 2025
Carrillo hopes there is a reconsideration of the job cuts from an already understaffed VA department.
“For everyone involved, these challenges highlight the critical need to address staffing shortages and ensure the smooth operation of VA loan services,” Carrillo said.
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