WASHINGTON – Late Friday, the U.S. Department of Veterans Affairs called on mortgage servicers to pause foreclosures until May 31, 2024. This pause will give VA borrowers a much-needed opportunity to access the upcoming VA Servicing Purchase (VASP) program. Through VASP, the agency will modify and purchase qualifying loans in default to provide meaningful payment assistance to VA borrowers in financial distress. Consumer advocates at the National Consumer Law Center (NCLC) and the Center for Responsible Lending (CRL), along with U.S. Senators Jon Tester (Mont.), Sherrod Brown (Ohio), Jack Reed (R.I.), and Tim Kaine (Va.), had urged the VA to pause foreclosures until its VASP program is effective and widely available.
“The foreclosure pause is badly needed as Veteran borrowers have had no meaningful alternatives to foreclosure for over a year,” said Steve Sharpe, senior attorney at the National Consumer Law Center. “We applaud VA and the Biden Administration for taking necessary steps to protect Veteran families, and we look forward to the release of VASP.”
“The VA’s foreclosure pause is critically important for giving Veteran borrowers a path to avoid foreclosure. We now urge VA to ensure that VASP will be broadly available and provide relief that many VA borrowers need, especially in the current high interest rate environment,” said Kanav Bhagat, consultant to the Center for Responsible Lending. “The VASP program will give tens of thousands of active-duty servicemembers and Veterans the assistance they have earned through their service, allow them to remain in their homes, and avoid foreclosures.”
Earlier this year, NCLC and CRL provided comments to the VA urging expansion of home retention alternatives for borrowers with VA-guaranteed loans who are facing financial difficulties. The comments explained that the VA’s current system fails to provide relief and will unnecessarily cause some active-duty servicemembers and Veterans to lose their homes. The comments also urged the VA to avoid placing unneeded and burdensome procedural barriers on borrowers trying to access the relief.