The U.S. Department of Veterans Affairs (VA) announced on Thursday that it will discontinue a mortgage-assistance program aimed at helping veterans avoid foreclosure. However, the VA has provided limited information, leaving it uncertain whether a new support program will take its place.
Mortgage Bankers Association (MBA) President and CEO Bob Broeksmit, CMB, released the following statement on the VA's reported plans of a phase-out of its Veterans Affairs Servicing Purchase (VASP) program:
“Halting the VASP program will increase the number of veterans facing foreclosure unless the VA and Congress implement a permanent partial claim option as soon as possible.
“Against the advice of MBA and other industry stakeholders, the VA ended its Partial Claim Payment program in 2022, leaving thousands of struggling veteran homeowners at risk of foreclosure. The VA then created VASP last year as the only viable home retention option for many veteran homeowners who could resume making payments after a temporary hardship, offering them the opportunity to do so via a more affordable and sustainable payment.
“Mortgage servicers worked tirelessly, and often with conflicting guidance, to ensure that the program was able to work for the veterans they are proud to serve. Any characterization of VASP as a ‘lender bailout’ is patently false and entirely inappropriate, given that the mortgage industry voluntarily honored a foreclosure moratorium for months until the VA was able to provide VASP as the only available solution.
“The work must start immediately to strengthen the VA’s loss mitigation toolkit, and that includes implementing a permanent partial claim option, a foreclosure avoidance tool that is widely used in every other government loan program. MBA is eager to continue to work with the VA and Congress to protect veterans and ensure that they can utilize the housing benefit they earned through their service.”
On March 11, 2025, Elizabeth Balce, Executive Vice President of Servicing at Carrington Mortgage Services, testified on behalf of MBA at a legislative hearing before the Committee on Veterans’ Affairs Subcommittee on Economic Opportunity. The hearing focused on critical reforms to the VA Home Loan Program, including concerns over the future of the VA Servicing Purchase (VASP) program and the need for a permanent partial claim solution.
Balce proposed several changes to ensure the program is workable and provides maximum benefit to veterans.
Balce's prepared oral statement contends that, first, the bill must clarify a partial claim does not reduce the VA guaranty on the first mortgage. “If a partial claim is deducted from the 25% loan guaranty, lenders will be left with little to no remaining coverage, increasing risk and making VA loans less competitive in the market. This could reduce veterans’ access to VA mortgages,” her statement reads.
“Second, the bill currently requires veterans to begin repaying their partial claim within three years to maintain a 0% interest rate, with a 0.5% interest rate imposed if repayment is delayed. Veterans should not be subjected to unnecessary repayment burdens that could jeopardize their ability to remain in their homes. This is inconsistent with other government partial claims and would prove difficult to operationalize,” Balce continued. “Third, the bill sunsets the partial claim program on September 30, 2027. This would significantly limit its effectiveness. A longer effective window—such as five years—would ensure meaningful assistance for more veterans.”
Lastly, Balce stated that shifting to VASP, a tool that’s provided critical relief to thousands of veterans whose loan payments became unaffordable in today’s higher rate environment. While partial claims should remain the first line of defense, Balce says VASP has been an essential safety net for borrowers who had no other options.
“Without VASP, VA would have foreclosed on tens of thousands of veterans,” she added.
