Starting on May 31, 2024, the Department of Veterans Affairs (VA) will be launching a new program, the Veterans Affairs Servicing Purchase (VASP) Program to “bailout” over 40,000 veterans, who are experiencing severe financial hardship due to avoid foreclosure and stay in their homes.

The VASP will serve as the former service members “last resort” option, who have defaulted on their home loans and are not eligible for other VA loan assistance programs.

In the November 23, 2023, issue of The Clermont Sun, an Opinion Editorial described how the inaction by the VA had negatively impacted over 40,000 veterans facing their home being foreclosed.

During the height of the COVID-19 pandemic, many families faced financial difficulties. The VA offered veterans a temporary pause on VA home loan mortgage payments, called Partial Claim Payment (PCP) Program, through a process called forbearance.

In theory, any missed monthly mortgage payment would be added to the back-end of the mortgage contract. However, the VA Program was only valid for a limited time-period and the VA Program subsequently ended. Many veterans, who were in the forbearance process, had to seek mortgage relief at substantially higher interest rates.

Senators Sherrod Brown and Jon Testor introduced S. 3728, the Veterans Housing Stability Act of 2024 on February 1, 2024, to resolve the problem.

Similar House legislation (H.R. 7898) was introduced on April 9, 2024 by Congressmen James Moylan and Chris Deluzo.

These proposed bills would prevent VA Home Loan veterans from losing their homes when they are working to catch up on their mortgage payments.

“Veterans want to make their payments and get back on track,” explained Senator Brown. “But right now VA isn’t offering them any workable option to do that.”

These two (2) proposed legislative bills spurred the VA to introduce the VASP Program on May 31, 2024.

Under VASP Program, the VA will purchase delinquent loans from holders and become the primary loan servicer, providing borrowers a stable payment plan at a fixed rate of 2.5% for the remainder of their loan, according to VA Under Secretary for Benefits Joshua Jacobs.

The purpose, according to the VA Under Secretary Jacobs, is for the VASP Program to serve as a safety net for an estimated 40,000 veterans at the highest risk for foreclosure and who “cannot resolve their delinquency through traditional VA home retention options.”

“When a veteran falls on hard times, we work with them and their loan servicers every step of the way to help prevent foreclosure – including repayment plans, loan modifications, and more,” continued Jacobs.

“Let me be clear, VASP Program is a last resort option that may be available when it is the most appropriate home retention option under VA’s home retention waterfall,” Jacobs said. “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.”

Since the VA began backing home loans in 1944, it has helped active-duty troops, veterans and survivors purchase more than 28 million homes. Currently, more than 3.7 million veterans have a VA-guaranteed home loan, with the VA backing nearly 401,000 home loans in 2023 alone.

Based upon complaints made by elected officials, such as Senator Brown and Testor, the VA announced in November of 2023, that it would ask mortgage service providers with VA-backed loans to pause foreclosures and extend a modification program instituted during the COVID-19 pandemic through the end of this year.

When the VA ended the Partial Claim Payment (PCP) Program during the COVID-19 pandemic, veterans were now at risk of losing their homes.

The veterans received bills from their mortgage companies for the total payments missed, facing large amounts of debt to either keep existing low-interest mortgages or refinancing under interest rates that rose significantly in 2023 rates.

According to the VA, veterans will not apply directly to the program, which will begin on May 31, 2024. Instead, mortgage holders will identify borrowers in need and submit requests for the program on behalf of the veterans, VA officials said.

VA officials stressed that the program is only for those “facing seriously delinquent and serious default situations.”

“If you are not in default, this program is not for you. You must be in default and you have to be in default a certain amount of time,” said John Bell, executive director for the Home Loan Guarantee Program at the VA.

Veterans who do not qualify but are facing financial hardship should work with their mortgage services to explore other options, VA officials said.

Any veteran struggling with making their mortgage payments should check out the VA’s housing assistance website or call 877-827-3702 directly.

My Opinion: Although the VA states: “veterans will not apply directly” to the VASP Program, I would recommend that veterans in default situations contact the VA at the above-cited telephone number after May 31, 2024.

Why trust that the mortgage holders will correctly identify the veterans and then submit requests for the VASP Program on behalf of the veterans?

I have worked with Senator Brown’s staff in identifying veterans (in this foreclosure predicament) for a roundtable discussion and I am glad that Senator Brown has sponsored S. 3728 to resolve the situation.

BioSketch: John Plahovinsak is a retired 32-year Army veteran who served from 1967 to 1999. He served as the Past Department Commander of the Disabled American Veterans (DAV) Department of Ohio from 2019-2021 and as the current Adjutant of Chapter #63 (Clermont County). He can be reached at: plahovinsak@msn.com.