(Photo: Taber Andrew Bain)
Officials from the VA announced that beginning May 31, thousands of Veterans who face foreclosure due to post-Pandemic mortgage issues will have access to a “last-resort” program.
Under the new Veterans Affairs Servicing Purchase, VASP, program, the department will be able to buy defaulted VA loans from outside mortgage servicers and change the terms to help Veterans keep their properties who are struggling financially. For the duration of their loans, borrowers will have a guaranteed fixed interest rate of 2.5%.
According to the department, the new program will assist roughly 40,000 Veterans, Service Members, and their families who are presently having difficulty repaying VA-backed mortgages.
VA Undersecretary for Benefits Joshua Jacobs stated, “This program will help ensure that when a Veteran goes into default, there is an additional affordable payment option that will work in a higher-interest rate environment, so they can keep their homes.”
The new program, according to VA planners, will save the agency roughly $1.5 billion in the next ten years by averting housing voucher costs, federal loan defaults, and other issues associated with Veterans Homelessness.
Following the spring 2020 coronavirus pandemic, Congress approved a forbearance program that allowed some people who lost their regular source of income to temporarily stop making mortgage payments. Thousands of Veterans discovered they owed large payments on their homes when that program ended in October 2022, which forced some into default and others into unfavorable new home loans.
“This is not an incentive for default,” stated Jacobs.
Only Veterans who have fallen behind on their mortgage payments will be eligible for this program. Veterans who have recently renegotiated higher-priced, new mortgages will not be eligible.
This program will not be an option if there are other home-retention options available, such as a loan modification or repayment plan, which will address the home loan delinquency. Veterans who qualify for VASP will have their mortgages bought by the VA rather than having to apply to be included.
Last fall, all mortgage companies were urged by the VA to postpone further foreclosures until May 2024 in order to help with the establishment of the new support program. Currently, the VA is supporting over 3.7 million active home loans, with 400,000 of those loans being from 2023.
Veterans can visit the VA home loans website or call VA at 877-827-3702, option 4, if they are having trouble paying their VA-backed mortgage loan.
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.
