VA Ends VASP Program, Leaving Thousands of Veterans With Higher Mortgage Payments

The Department of Veterans Affairs closed the Veterans Affairs Servicing Purchase program on May 1, 2025, a move that left thousands of veterans without a low-interest option for catching up on missed mortgage payments. According to an investigation by NPR, more than 15,000 veterans who received loan modifications after a financial hardship saw their monthly payments increase by at least $150. Another 700 veterans faced payment increases of $1,000 or more.

The VASP program had allowed veterans to roll missed payments into a new mortgage at a 2.5% interest rate. When the administration ended the program, veterans who fell behind on payments were often forced to accept loan modifications at current market rates, which stood near 7% at the time. NPR found that 63% of veterans who received a modification faced a payment increase, a sharp contrast to the 2% rate seen in loans guaranteed by Fannie Mae and Freddie Mac.

Scott Boyd, an Army veteran who bought a home near Columbus, Ohio, in 2021, experienced the consequences firsthand. After losing his job and seeking treatment for PTSD, Boyd fell behind on his mortgage. His lender advised him that VASP would allow him to pause payments and catch up later. When that program ended, Boyd accepted a modification that raised his interest rate from 2.75% to 6.75% and extended his loan term to 40 years. His monthly payment increased by $1,181.

Housing industry groups warned Congress in March 2025 that ending VASP without a replacement would leave veterans with worse options than other homeowners. Matthew Douglas of the Housing Policy Council stated that the outcome was a mathematical certainty. Despite these warnings, the program was terminated administratively without a congressional vote. Rep. Mike Bost, chairman of the House Veterans' Affairs Committee, and Rep. Derrick Van Orden, who supported the termination, did not respond to requests for comment regarding the new data.

Congress passed a bipartisan bill to create the VA Partial Claim Program, which would allow veterans to move missed payments to the end of their loan terms. The VA announced details of this new program in June 2026. However, it took more than 13 months after VASP ended for the VA to finalize the plan, and mortgage companies were given 180 days to implement it. Most lenders have not yet offered the program to borrowers.

The VA stated that it helps veterans retain homeownership through forbearance and modification programs. The department has a deadline of November 28 for industry implementation of the new Partial Claim Program. Veterans who already accepted modifications during the gap between programs will remain in their higher-cost loans unless Congress or the VA takes further action. Rep. Mark Takano, ranking member of the House Veterans' Affairs Committee, said the VA could place those veterans back into lower-cost mortgages.

Foreclosures on VA loans rose to a 10-year high following the termination of VASP. Industry experts warned in a September congressional roundtable that a wave of foreclosures is still possible if the government does not assist veterans stuck in high-cost modifications.