The Department of Veterans Affairs has "strongly encouraged" mortgage servicers to extend their pause on foreclosures of certain home loans guaranteed by the VA through the end the year, according to an update released Wednesday on the VA News website.
The VA's call aims to give nearly 40,000 veterans more time to find ways to stay in their homes, and comes just ahead of the official start to the new Veterans Affairs Servicing Purchase program, or VASP.
Announced by the VA just last month, VASP will be a "last resort" for veterans who have defaulted on home loans and, because of those defaults, are not eligible for other VA loan assistance programs.
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Through VASP, the VA will purchase qualified veterans' loans from loan servicers, helping to make the loan more affordable for the homeowner. Mortgage servicers must have VASP fully implemented by Oct. 1.
"Let me be clear, VASP is a last resort option that may be available when it is the most appropriate home retention option under VA's home retention waterfall," VA Under Secretary of Benefits Joshua Jacobs told reporters last month.
According to the news release, veterans will not apply directly through the VA to use VASP benefits. Instead, the veteran's mortgage servicer is expected to submit a request to the VA, on the veteran's behalf.
In 2023 alone, the VA backed more than 400,000 home loans and helped 145,000 avoid foreclosure. Currently, the department guarantees home loans for more than 3.7 million veterans.
The VA said in November that it would ask mortgage service providers to pause foreclosures following a 2023 investigation by NPR that found thousands of veterans who'd used a COVID-era program designed to allow homeowners to defer payments were unexpectedly facing foreclosure. According to the report, roughly 6,000 veteran homeowners were in the foreclosure process and 34,000 were delinquent.
VASP is part of the VA's response to rectify the fallout from the debacle.
Military.com has previously reported that the VA expects VASP to be "net revenue positive" for the federal government, with a benefits reduction of $1.5 billion over 10 years, because "the savings associated with foreclosure outweighs the cost of purchasing the loans," according to Jacobs.
In this week's news release, the VA advised veterans facing financial hardship to first contact their mortgage servicers to explore all available home retention options.
For additional support, call the VA directly at 877-827-3702 or visit the VA Home Loans website.
-- Kelsey Baker is a graduate student at Northwestern's Medill School of Journalism, and a former active-duty Marine. Reach her on X at @KelsBBaker or bakerkelsey@protonmail.com.
Related: VA Introduces New 'Last Resort' Loan Program to Help Roughly 40,000 Veterans Keep Their Homes
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