The Department of Veterans Affairs will launch a new program on May 31 which aims to help more than 40,000 veterans experiencing severe financial hardship avoid foreclosure and stay in their homes.
The Veterans Affairs Servicing Purchase (VASP) program is a new, last-resort tool for eligible veterans, active-duty service members, and surviving spouses with VA-guaranteed home loans who are experiencing severe financial hardship.
Through VASP, VA will purchase defaulted VA loans from mortgage servicers, modify the loans, and then place them in the VA-owned portfolio as direct loans.
“When a veteran falls on hard times, we work with them and their loan servicers every step of he way to help prevent foreclosure – including offering repayment plans, loan modifications, and more,” said Under Secretary for Benefits Josh Jacobs in a statement.
He added that some veterans still need additional support after those steps, and that’s what VASP is all about.
“This program will help ensure that when a veteran goes into default, there is an additional affordable payment option that will work in a higher interest rate environment – so they can keep their homes,” Jacobs said.
The new program will empower VA to work directly with eligible veterans to adjust their loans and monthly payments so they can keep their homes. With VASP, these borrowers will have a fixed 2.5 percent interest rate that will provide a consistent, affordable payment for the remainder of their loan.
“We at VA are committed to doing everything in our power to help veterans avoid foreclosure, and that’s exactly why we’re launching VASP, to help the veterans who need it most,” said VA Secretary Denis McDonough.
Veterans will not apply directly for VASP. Instead, beginning May 31, mortgage servicers will identify qualified borrowers and submit requests on behalf of veterans based on a review of all home retention options available and qualifying criteria. Veterans facing financial hardship should work with their mortgage servicers to explore their options.
VA anticipates that VASP will result in a government subsidy spending reduction of approximately $1.5 billion from 2024 to 2033. That is because the savings associated with avoiding foreclosures outweigh the cost of purchasing these homes.
Veterans who are having difficulty reaching a resolution with their mortgage servicer can contact VA at 877-827-3702, option 4. For more information about the VASP program, read the policy here. For more information on VA home loans, visit the VA home loans website.
Reach Julia LeDoux at Julia@connectingvets.com.
