CORPUS CHRISTI, Texas — The Department of Veterans Affairs will be offering a new lifeline for veterans who are at risk of losing their homes.
On May 31, 2024, the VA will launch a new program, the Veterans Affairs Servicing Purchase (VASP) program, to help more than 40,000 Veterans experiencing severe financial hardship avoid foreclosure and stay in their homes.
VASP is a new, last-resort tool in the VA's home retention options for eligible Veterans, active-duty Service members, and surviving spouses with VA-guaranteed home loans who are experiencing severe financial hardship. Through VASP, the VA will purchase defaulted VA loans from mortgage servicers, modify the loans, and then place them in the VA-owned portfolio as direct loans. This will allow the VA to work directly with eligible Veterans to adjust their loans and their monthly payments. With VASP, borrowers will have a fixed 2.5% interest rate, which will provide a consistent, affordable payment for the remainder of their loan.
"This new program will help more than 40,000 Veterans and their families stay in their homes, and there's nothing more important than that," said VA Secretary Denis McDonough. "We at VA are committed to doing everything in our power to help Veterans avoid foreclosure, and that's exactly why we're launching VASP – to help the Veterans who need it most."
"When a Veteran falls on hard times, we work with them and their loan servicers every step of the way to help prevent foreclosure – including offering repayment plans, loan modifications, and more," said Under Secretary for Benefits Josh Jacobs. "But some Veterans still need additional support after those steps, and that's what VASP is all about. 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."
Veterans will not apply directly for VASP. Instead, beginning May 31, mortgage servicers will identify qualified borrowers and submit requests on behalf of Veterans based on a review of all home retention options available and qualifying criteria. Veterans facing financial hardship should work with their mortgage servicers to explore available options.
VA anticipates that VASP will result in a government subsidy spending reduction of approximately $1.5 billion from 2024 to 2033. It says this could make it beneficial for Veterans, taxpayers, servicers, and loan holders alike. This is because the savings associated with avoiding foreclosures outweigh the cost of purchasing these homes. VA has existing authority to establish and implement VASP under 38 U.S.C. § 3732 and § 3720.
VA's existing programs help veterans get access to and retain homes by guaranteeing home loans with no down payment requirements and competitively low-interest rates. In total, the VA has helped Veterans, service members, and survivors obtain more than 28 million homes. Currently, more than 3.7 million Veterans have active home loans guaranteed by VA, and VA guaranteed 400,695 home loans in 2023 alone.
Veterans who are having difficulty reaching a resolution with their mortgage servicer can contact VA at 877-827-3702, option 4.
For more information about the VASP program click here.
For more information on VA home loans click here.
(The Department of Veterans Affairs contributed to this report)
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Contact Veterans In Focus reporter Michelle at michelle.lorenzo@kristv.com
