Veterans who are struggling to keep up with their mortgage payments can now be reassured that they’ll receive the help they need. A new law will allow the Department of Veterans Affairs to ease the financial burden of these borrowers by catching them up on those overdue payments. That federal assistance means vets get to stay in their homes even when times are tough. Keep reading to learn more about the benefits of the new VA Home Loan Program Reform Act and how it supports housing for veterans.
What is the VA Home Loan Program Reform Act?
On Wednesday, July 30, President Donald Trump signed the VA Home Loan Program Reform Act into law. The legislation was created to update the Department of Veterans Affairs’ mortgage servicing program and make it easier for veterans to keep their homes.
This is welcome news for many after the previous Department of Veterans Affairs mortgage rescue program, the Veterans Affairs Servicing Purchase Program (VASP), was shut down on May 1. The program was established in May 2024 by the Biden administration to help veterans who were struggling to keep their homes, and around 200,000 people were able to benefit from it.
Leading up to the program’s elimination, there were talks that it would be replaced eventually by a partial claims program, like the one established in the new law. In the meantime, however, VASP stopped accepting enrollees and veterans were left without an alternative option.
Now, however, the new law aims to make homeownership still possible for veterans.
How the new partial claims program works
The Act includes two key provisions that are designed to help both the VA and veterans throughout the country. Here’s a look at what’s included in the legislation:
Partial Claims Program
In this new program, the VA will now be allowed to advance funds to help cover the payments for borrowers who are seriously delinquent, reports NationalMortgageProfessional.com. Then the homeowner will be able to catch up on their mortgage without having to refinance or alter their original loan terms.
It’s important to note that the original loan is not transferred through this program. The veteran will still be responsible for paying their original lender, as well as the VA, back for that partial amount they were loaned.
The good news is that usually there is no interest if the amount is paid back within three years. After that time, it’s expected that around 0.5 percent interest will be applied.
One caveat: There’s only one partial claim per loan allowed, so veterans will not be able to receive help from the VA a second time should they go into delinquency again for the same loan.
The program itself also has a time limit, with the authority for the partial claims ending after five years.
Increased funding
Another key element of the new law is the temporary increase in funding for the VA’s Grant and Per Diem program. This program is aimed at providing both transitional housing and support services to homeless veterans to help them get back on their feet.
Rather than giving the money directly to vets, the funds are distributed to community-based organizations that tackle these issues. They then use the grants to provide services like employment assistance, counseling and life skills training while also helping veterans secure permanent housing.
The funding increase will ensure the Grant and Per Diem program receives $344 million instead of $258 million for the 2025 and 2026 fiscal years.
Who qualifies for VA mortgage assistance?
Now that the VA Home Loan Program Reform Act is officially legal, vets who are seriously falling behind on their mortgages will be able to receive the help they need to avoid foreclosure.
“This law helps fulfill a promise to those who protected us with their service and continue to do so today by providing a path to maintain homeownership,” Representative Derrick Van Orden said in a press release.
Though the temporary relief is only guaranteed for five years, it’s possible that new legislation could eventually pass to extend it.
If you or a veteran you know is struggling to make payments on a home, it’s best to reach out to the loan servicer. They can work with you on available options before the partial claims program is even necessary.
You can also contact a VA loan technician for help or advice at 877-827-3702. A representative is available Monday through Friday, from 8:00 a.m. to 6:00 p.m. EST.
