Rising costs have left many struggling to pay bills, and that includes making on-time rent and mortgage payments. For former military members in this situation, a Biden-era program offered by the Department of Veterans Affairs made it possible to get back on track. Now, however, veterans going through a tough time financially could be facing foreclosure with the program set to end. Keep learning to learn more about why the mortgage-rescue program is being phased out and what you should do if you’re unable to make payments on your VA loan.

A look at the VASP mortgage-rescue program ending

Starting May 1, the Department of Veterans Affairs (VA) is ending a mortgage-rescue program for veterans, reports CNN. Known as the Veterans Affairs Servicing Purchase Program (VASP), it was established in May 2024 by the Biden administration to help veterans struggling to keep their homes.

The program has benefited around 20,000 people so far, according to NPR, but now many others will be out of luck. There are reportedly 33,000 VA loans that are already in the foreclosure process and another 90,000 loans that are past due.

But this sudden change means that anyone who isn’t already part of VASP will be unable to join. “[As of May 1,] the program, which was unilaterally created by the Biden Administration and lacks congressional authority, will stop accepting new enrollees,” the VA said in a statement to NPR.

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What is the Veterans Affairs Servicing Purchase Program?

As part of VASP, veterans or active-duty service members with a VA-guaranteed home loan utilize the program if they are facing foreclosure.

How it works: The homeowner’s modified loan is purchased by the department from the original loan servicer. “A modified loan means that the servicer changed the loan terms to make it easier for you to repay what you owe,” explains the VASP website.

The result is a new, low-interest loan that the VA owns outright. The benefit to veterans is that their monthly payment is lower, providing them with a chance to catch up on their mortgage payments and ideally avoid foreclosure.

VASP is considered a last-resort option, and it’s always been up to the loan servicer to determine if a loan qualifies for the program. Generally, they’ll exhaust other options first before submitting your information to the VA if you agree to participate.  

What made a loan eligible for VASP:

1.     The loan is 3-60 months delinquent.
2.     The homeowner or immediate family members lives on the property.
3.     The owner isn’t in active bankruptcy.
4.     The reason for loan default is resolved and on-time payments can resume.
5.     There’s a stable and reliable income source.
6.     At least 6 monthly payments have already been made on the loan.

Why the closing of the VASP program is a concern

The news of the program ending has many wondering what this could mean for veterans and military members who are struggling financially. The VASP program was put into place when it was discovered that there was no affordable way for homeowners with a VA loan to catch up on their mortgage payments if they fell behind.

But government officials argue that it’s not the place of the VA to handle those issues. “This change is necessary because VA is not set up or intended to be a mortgage loan restructuring service,” the department told CNN.

There are talks of establishing a partial claims program at the VA, which would allow homeowners the chance to take out an interest-free loan to cover their unpaid payments. Then the borrowed funds would be added to the end of the mortgage.

However, no alternative option is currently in place for those in danger of foreclosure. With the sudden shuttering of the program, advocates say struggling veterans who weren’t already enrolled are now left stranded.

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What are my options without the VASP program?

If you’re having trouble making payments on a VA loan for your home and aren’t already partaking in the VASP program, it’s best to contact your loan service provider. They can work with you to figure out what options are available. These often include repayment plans, loan modifications and special forbearances.

As a last resort, there are other alternatives to consider that can help you avoid foreclosure. “You could sell your home through a private sale, or your servicer might agree to a short sale or a deed-in-lieu of foreclosure,” suggests the VASP website (which has not yet been updated to reflect the recent changes.)

Veterans who are having trouble making their mortgage payments are also encouraged to ask for help or advice from a VA loan technician. You can call 877-827-3702 or send a message via the support portal.