Braxton Taylor
The Trump administration is ending a Department of Veterans Affairs program started by the Biden administration intended to help keep veterans struggling to pay their mortgages in their homes.
The VA will stop accepting new participants for what’s called the Veterans Affairs Servicing Purchase program, or VASP, starting May 1, the department confirmed Friday.
“This change is necessary because VA is not set up or intended to be a mortgage loan restructuring service,” VA press secretary Pete Kasperowicz said in a statement that added the VASP program was “unilaterally created by the Biden administration and lacks congressional authority.”
Read Next: Marine Corps Denies Family’s Legal Claim of Abuse by Ex-Recruiter as They Fear His Retaliation
“This action will not affect any of the program’s existing participants, nor will it impact any eligible veterans who complete their VASP enrollment prior to May 1, 2025,” Kasperowicz added.
VASP was created as an emergency rescue program last year after NPR first reported that thousands of veterans who used COVID-19 pandemic-era programs to defer mortgage payments were at risk of losing their homes after the pandemic programs ended.
The pandemic programs allowed veterans with a VA-backed home loan who lost their normal stream of income to skip mortgage payments for months and move the missing payments to the end of their loan term. But when the last of those programs was shuttered in October 2022, thousands of veterans started receiving unaffordable bills for mortgage payments they missed.
The Biden administration insisted it could not restart what was called the Partial Claim Payment program without congressional authorization, so it created the VASP program as a solution.
Under VASP, the VA purchased delinquent loans from holders and became the primary loan servicer, providing borrowers a stable payment plan at a fixed rate of 2.5% for the remainder of their loan.
The program helped more than 17,000 veterans stay in their homes, according to the VA.
But congressional Republicans loathed the program because, they argued, the VA becoming the loan holder put taxpayer dollars at unacceptable risk. The VA purchased about $5.5 billion worth of loans through the program, according to the department.
“We — along with many of our colleagues — had serious concerns about the impact VASP would have on not only the future of VA’s home loan program, but the mortgage lending business as a whole,” House Veterans Affairs Committee Chairman Mike Bost, R-Ill., and Rep. Derrick Van Orden, R-Wis., who chairs the committee’s economic opportunity subcommittee, said in a joint statement celebrating the end of the program.
Bost and Van Orden also vowed that House Republicans will work to reestablish a partial claims program at VA “to ensure veterans can stay in their homes if they’re in financial hardship while still protecting the American taxpayer.”
At a hearing last month with Van Orden’s subcommittee, a representative from the Mortgage Bankers Association warned that ending the VASP program without an alternative like a partial claims program already in place would mean “foreclosure. Period.”
“That’s really where it’s going to come to,” testified Elizabeth Balce, who was representing the association. “The short answer is foreclosure.”
Democrats issued similar warnings Friday.
“The VASP program provided relief to veterans in every state who were on the brink of homelessness,” Rep. Mark Takano, D-Calif., the ranking member of the House Veterans Affairs Committee, said in a statement. “The alternative Republicans tout — a so-called ‘partial claim program’ — doesn’t exist yet, and even if it did, it wouldn’t help the veterans who are in trouble right now. Ending VASP without a real, functioning alternative in place is reckless and dangerous.”
Related: VA Introduces New ‘Last Resort’ Loan Program to Help Roughly 40,000 Veterans Keep Their Homes
Story Continues
Read the full article here