President Donald Trump signs the VA Home Loan Program Reform Act alongside Rep. Derrick Van Orden (R-WI) and Rep. Mike Bost (R-IL). (Photo: Jim Watson/Getty Images)

A new law signed this week introduces permanent changes to the VA Home Loan Program, providing Veterans with more options to avoid foreclosure and stay in their homes during financial hardship.

The VA Home Loan Program Reform Act, sponsored by Rep. Derrick Van Orden (R-Wis.), establishes a partial claims program that allows Veterans who are behind on mortgage payments to move those missed payments to the end of their loan. This provides borrowers with a way to catch up without having to refinance or risk losing their home. The program is designed to offer the same kind of support that non-Veterans have through FHA and USDA home loans.

The bill replaces the Veterans Affairs Servicing Purchase, VASP, program, which ended on May 1. Created in 2024, VASP allowed the VA to buy delinquent loans, adjust the terms, and offer a fixed 2.5% interest rate. The program helped thousands of borrowers but drew criticism from Republican lawmakers who argued that it was launched without Congressional approval and could place a long-term financial burden on taxpayers.

With VASP no longer available, more than 43,000 Veterans with loans that are six or more months delinquent were left without a clear solution. The new law fills that gap and prevents a wave of foreclosures, especially as COVID-era protections have expired and foreclosure activity has begun to rise.

Rep. Van Orden said the law delivers on a promise to support Veterans through hard times. “This law helps fulfill a promise to those who protected us with their service by providing a path to maintain homeownership,” he said.

House Veterans’ Affairs Committee Chairman Mike Bost (R-IL) said the bill brings the VA’s home loan program up to date.

“Our Veterans and their families should have every tool at their disposal to keep their homes and reduce the risk of foreclosure if they fall into financial hardship,” Bost said. “Rep. Van Orden’s VA Home Loan Program Reform Act will modernize the VA Home Loan to meet Veterans’ needs and reduce the risk of Veteran homelessness.”

The law also makes a temporary policy change permanent by allowing VA buyers to pay real estate agent commissions if needed. That rule had previously hurt VA borrowers in competitive housing markets where sellers refused to cover those costs.

Additional funding for transitional housing programs is also included in the bill, supporting Veterans who are already at risk of losing their homes. The VA’s Grant and Per Diem, GPD, program, which funds shelters and services for homeless Veterans, will receive more resources under the new law.

The partial claims program is expected to bring the VA’s mortgage relief options in line with other federal agencies and provide long-term support for both borrowers and loan servicers. Veterans struggling with payments are encouraged to reach out to their lenders or contact the VA for more details about the new option.

Author: Rikki Almanza

Rikki is a Web Content Coordinator for the American Legion, Department of California. With a deep-rooted family connection to the military, Rikki is committed to using her skills and knowledge to provide valuable assistance and resources to servicemembers and veterans.