Trump Administration Ends Key VA Mortgage Rescue Program Aiding Struggling Veterans

The Trump administration is ending a debt relief program that has been around for a year and has helped thousands of veterans stay in their homes. This has lawmakers and housing advocates worried about a possible wave of foreclosures.

The Biden administration started the VA Servicing Purchase (VASP) in 2023. The Department of Veterans Affairs stated Friday that it will no longer accept new applications after May 1. The scheme's goal was to help veterans who fell behind on their mortgage payments during the COVID-19 pandemic.

VA press secretary Pete Kasperowicz said, "VA is not set up or intended to be a mortgage loan restructuring service." He also noted that the Biden administration "unilaterally created" the program without getting approval from Congress. However, Kasperowicz said that current participants and people who sign up before May 1 will not be harmed.

The VASP program was created as a workaround after government mortgage forbearance programs from the pandemic ended, leaving many veterans unable to pay their loans. The VA bought $5.5 billion in past-due loans through VASP and gave borrowers a stable 2.5% fixed interest rate. According to the VA, this helped over 17,000 veterans avoid foreclosure.

Many people saw the program as a lifesaver, but Republicans in Congress were very critical of it, saying it put taxpayers' money at risk for no reason. In a joint statement, Rep. Derrick Van Orden (R-Wis.) and Mike Bost (R-Ill.), Chairman of the House Veterans Affairs Committee, said they were glad the program was ending and promised to work toward a congressionally approved partial claims program instead.

But people who work to protect housing say that there isn't a replacement scheme in place yet, which means that thousands of veterans could lose their homes.

"At the end of the day, ending VASP without a good replacement means foreclosure." "Period," Elizabeth Balce of the Mortgage Bankers Association told Congress at a recent meeting.

The top Democrat on the House Veterans Affairs Committee, Rep. Mark Takano (D-Calif.), called the move "reckless and dangerous." He also said that the partial claim solution that Republicans back is "not yet real" and can't help veterans who need help right now.

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