News & Impact Stories

Abrupt End of VASP Program Leaves Veterans, Families at Risk of Home Loss

May 1, 2025 — Press Release

Veterans Affairs Servicing Purchase Program Provided ‘Last Resort’ for Veterans, Congress Must Act Quickly to Fill the Gap

WASHINGTON – Today, the U.S. Department of Veterans Affairs (VA) dramatically increased the risk of foreclosure for tens of thousands of Veterans and their families. The VA discontinued the Veterans Affairs Servicing Purchase (VASP) program, the only VA mortgage assistance option that currently helps the vast majority of borrowers obtain an affordable payment when they are delinquent on their mortgage. 

On April 23, 2025, the VA issued Circular 26-25-2 announcing the termination of VASP just over one week later. Effective May 1, 2025, the VA will no longer accept VASP submissions. VA also announced it is rescinding the prescribed steps for considering Veterans for hardship assistance, removing consistency and transparency from the process.

“The men and women who wore our nation’s cloth have faced adversity and challenges while defending our freedoms around the world. The last thing we should do is turn our backs on them when they need help staying in their homes,” said Raul “Danny” Vargas, founder, chairman, and CEO of the American Latino Veterans Association.

From 2021-2022, the VA had a separate hardship assistance program in which delinquent borrowers could put a past due balance at the end of the loan. This approach, known as the “partial claim,” was similar to one offered by the Federal Housing Administration. A partial claim allows the Veteran to bring their loan current and resume their former payment. The borrower repays the deferred amount to VA when the loan pays off at 0% interest. Congress is currently considering legislation to re-start a partial claim program at VA.

“Today’s cancellation of the VASP mortgage assistance program for Veteran borrowers puts tens of thousands of Veterans and their families with VA home loans at great risk of losing their homes,” said Alys Cohen, senior attorney at the National Consumer Law Center. “The VA Home Loan Program is a benefit that Veterans have earned through service and sacrifice – it is meant to give them housing stability they deserve.”

The termination of VASP with no partial claim program in place results in Veteran borrowers having substantially worse options than other borrowers with federally-backed mortgage loans from FHA, USDA, Fannie Mae, and Freddie Mac and, as a result, Veterans with VA mortgages will face otherwise preventable foreclosures.

“When Veterans face financial hardship their options for saving their home should be at least as good as those available to other borrowers with government-backed mortgages,” said Cohen.

Many Veterans are affected by these developments. As of April 1, there were 75,000 Veteran borrowers who had missed 3 or more payments on their VA-guaranteed mortgage. Among those, VA reported that 17,000 have been accepted for VASP. More VA borrowers who need assistance may have been able to qualify for VASP ahead of the May 1st deadline, but the termination of VASP still leaves up to 58,000 or more Veterans and their families vulnerable to foreclosure.

“Financial hardship happens to everyone, and it’s a bedrock principle of federal housing policy that borrowers with a financial hardship should be able to bring their loans current and avoid foreclosure if they can afford the new plan,” said Mike Calhoun, president of the Center for Responsible Lending. “Congress quickly enacting a partial claim program would benefit Veteran homeowners and the VA as well, since avoidable foreclosures on federally-backed loans result in unnecessary government losses.”

NPR reported on one Iraq War Veteran who served two combat tours and came home with physical and psychological wounds that have needed substantial care. The VA loan program helped his family buy a home and the hardship assistance could help them keep it. But only if assistance remains available. 

The Administration and Congress should take the following actions to protect Veterans and their families: 

  • The Administration should immediately restore VASP at least until a partial claim program is up and running; 
  • The VA should examine its authority and implement any additional programs it can right now to protect Veterans’ homes; and 
  • Congress should pass legislation quickly to restart a partial claim program for Veterans facing hardship.

Related Resources

Support NCLC

Please support NCLC's work to advance consumer rights and economic justice with a tax-deductible contribution today!

Donate