(Photo: bbcworldservice)
The VA will stop accepting new applications for the Veterans Affairs Servicing Purchase, VASP, program on May 1. Launched by the Biden administration in 2023, VASP was designed as a temporary solution to assist VA-backed mortgage holders at risk of foreclosure following the end of COVID-19-era mortgage forbearance programs.
VA press secretary Pete Kasperowicz said the program “was unilaterally created by the Biden administration and lacks congressional authority.” He stated that current participants and those who enroll before the May 1 deadline will not be affected by the program’s termination.
Since May 2023, the VA has purchased over 17,000 loans totaling approximately $5.5 billion under VASP. These purchases enabled struggling Veteran homeowners to retain their homes through modified loans with reduced interest rates, typically at 2.5%. The agency stated that while the program served an emergency purpose, the VA is not structured to act as a long-term mortgage restructuring entity.
The decision to end VASP has drawn differing reactions. Republican lawmakers, including House Veterans’ Affairs Committee Chairman Mike Bost (R-Ill.) and Rep. Derrick Van Orden (R-Wis.), welcomed the move, arguing that the program placed undue financial risk on taxpayers and undermined the VA Home Loan program. A bill introduced by both legislators aimed to limit VA’s direct loan purchases under the program.
READ MORE: CONGRESS CONSIDERS CHANGES TO VA HOME LOAN PROGRAM
On the other hand, industry experts and housing advocates have expressed concern about the potential rise in Veteran foreclosures without a replacement program. Bob Broeksmit, president and CEO of the Mortgage Bankers Association, MBA, warned that halting VASP without implementing a permanent partial claim option could leave many Veterans without viable alternatives to avoid foreclosure.
Broeksmit stated that the VA’s previous partial claim program, which expired in 2022, had provided a helpful tool for borrowers to defer missed payments without additional interest. He described VASP as the only viable home retention option for some Veterans and disputed characterizations of the program as a lender bailout.
Foreclosure activity on VA loans has surged since a federal foreclosure moratorium ended in late 2024. In January 2025, VA loans accounted for roughly 20% of new foreclosure filings, an unusually high proportion. Experts suggest that the increase may be linked to the backlog of delayed proceedings during the moratorium period.
Housing policy analysts argue that the VA lacks the advanced loss mitigation tools available through other agencies like the FHA, Fannie Mae, and Freddie Mac. Some have called on Congress to grant the VA broader authority to establish standardized foreclosure-avoidance procedures similar to those used in the conventional mortgage market.
With VASP ending and no immediate replacement announced, housing advocates, lawmakers, and mortgage industry leaders continue to press for a permanent solution to support Veteran homeowners facing financial hardship.
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.
