The House Committee on Veterans’ Affairs Subcommittee on Economic Opportunity recently reviewed legislative proposals to strengthen the VA Home Loan Program. A primary focus was the “Restoring the VA Home Loan Program in Perpetuity Act,” introduced by Chairman Mike Bost (R-IL), which seeks to limit the number of direct loans the VA can repurchase. This proposal is intended to reduce the financial risks posed by the VA Service Purchase Program, VASP, which allows the VA to acquire and modify delinquent loans. Bost argues that VASP, if left unchanged, could undermine the program’s future viability.
“This legislation would limit the number of direct loans VA is authorized to purchase back to what VA had traditionally done before the creation of the VA Service Purchase Program,” says Bost. “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, a Veteran who has used the VA Home Loan Program multiple times, says the program must remain available for future generations. He advocates for a permanent partial claim option to help struggling borrowers defer missed payments without facing immediate foreclosure. This provision would align the VA Home Loan Program with similar relief programs under FHA, Fannie Mae, and Freddie Mac, allowing Veterans to recover financially while maintaining homeownership.
The proposed legislation draws mixed reactions. Elizabeth Balce of Carrington Mortgage Services, representing the Mortgage Bankers Association, MBA, expresses concerns that capping VA loan repurchases could restrict critical assistance for Veterans. Balce supports the introduction of a partial claim program but criticizes elements of the bill that could reduce its effectiveness. She argues that deducting a partial claim from the VA’s 25% loan guaranty increases risks for lenders, making VA loans less attractive and potentially limiting Veterans’ access to these benefits.
Additionally, Balce opposes the bill’s requirement that Veterans begin repaying their partial claims within three years to maintain a 0% interest rate. After three years, the balance accrues interest at 0.5%, a provision she describes as burdensome and inconsistent with other government-backed programs. She also raises concerns about the bill’s sunset date of September 30, 2027, arguing that a longer timeframe, such as five years, would provide more meaningful assistance.
While the legislation intends to protect the program’s financial stability, critics warn that restricting VA’s ability to repurchase loans may harm Veterans by reducing available mortgage options. Balce urges lawmakers to strengthen loss mitigation tools, such as a permanent partial claim, rather than impose arbitrary caps. The MBA also urges Congress to stop using the VA funding fee as a budget offset, stressing that it should remain dedicated to supporting the home loan program’s mission.
Lawmakers continue to debate the best approach to balancing financial responsibility with ensuring long-term support for Veterans seeking homeownership.
Author: Rikki Almanza
Rikki is a Web Content Coordinator for the American Legion, Department of California. With a deep-rooted connection to the military, a spouse who is a Navy veteran, a father who served in the Air Force for 25 years, and a grandfather who proudly served, Rikki is committed to using her skills and knowledge to provide valuable assistance and resources to servicemembers and veterans.
