A program designed to assist military veterans struggling with mortgage payments has been discontinued, resulting in significant financial hardship for thousands of borrowers across the country. According to data obtained by NPR from the Department of Veterans Affairs, more than 15,000 veterans who underwent loan modifications following financial difficulties experienced monthly payment increases of at least $150. Among the most severely affected, over 700 veterans saw their payments rise by $1,000 or more each month.
The terminated program, known as the Veterans Affairs Servicing Purchase (VASP) program, had provided a mechanism for veterans to consolidate missed payments into new mortgages at a fixed 2.5% interest rate. This approach enabled borrowers to catch up on delinquent accounts while maintaining manageable payment levels. The contrast between outcomes for VA-backed loans and those guaranteed by other entities highlights the divergence in modification practices. Analysis shows that 63% of veterans receiving loan modifications experienced payment increases, compared with only 2% of borrowers with mortgages backed by Fannie Mae and Freddie Mac.
Veterans and Democratic lawmakers have expressed concern about the program’s closure. Rep. Mark Takano of California, the ranking member of the House Veterans’ Affairs Committee, characterized the situation as problematic for borrowers already in financial distress. Veterans like Army veteran Scott Boyd, whose service included combat and intelligence work, have been particularly affected. Boyd, who purchased his home near Columbus, Ohio in 2021 using a VA loan, lost his job during a mass layoff and subsequently fell behind on payments while receiving treatment for PTSD at a VA facility. His loan modification resulted in a monthly increase of $1,181.
Republican opponents of the program had argued that VASP created fiscal risks for taxpayers by covering losses on troubled veteran loans. During a House committee hearing, supporters of ending the program expressed concerns that its continuation could jeopardize the long-term viability of VA home loan offerings. The VA stated that it continues to assist veterans through alternative programs including payment forbearance, loan modifications, and individualized repayment plans, though advocates argue these options are insufficient given current interest rate conditions.
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