Foreclosure Avoidance for Veterans: Veterans Affairs Servicing Purchase Program
The VA Veteran Affairs Servicing Purchase program, also known as VASP, is what the VA calls their “final option” for veterans trying to avoid foreclosure on VA mortgages, another step by the VA to help its borrowers in a time where elevated interest rates, inflation, and other economic issues make it harder to afford a home.
The Department of Veterans Affairs official site reports nearly 4 million veterans are paying on active VA home loans. A certain percentage of those borrowers get into trouble with their mortgage loans due to financial hardship, but help is available so these borrowers can keep their homes.
In 2023, the Department of Veterans Affairs offered foreclosure avoidance help to more than 145 thousand veterans and military members.
And that VA help is expanding. It includes a Department of Veterans Affairs program created in 2024 to help approximately 40 thousand of the hardest-hit veterans and currently serving military members save their homes and avoid foreclosure.
Related: VA Home Loan Guide
What is VASP?
Effective at the end of May 2024, the VA Veteran Affairs Servicing Purchase program, also known as VASP, is meant as the final option for veterans trying to avoid foreclosure on VA mortgages.
“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 offering repayment plans, loan modifications, and more,” according to VA Under Secretary for Benefits Josh Jacobs, who was quoted in a VA press release about VASP.
Jacobs adds that many veterans can get help with their VA mortgages in other ways, but some need more assistance.
“This program will help ensure that 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.”
Related: VA Home Loan Guide
How the Veterans Affairs Servicing Purchase Program Works
The VA describes VASP as a “last-resort tool” for VA borrowers. Qualifying service members and veterans must be experiencing financial hardship, but there is no borrower-facing application process.
Under VASP, participating VA lenders “identify qualified borrowers and submit requests on behalf of Veterans based on a review of all home retention options available and qualifying criteria.”
However, that does not relieve the borrower from responsibility for the mortgage. The borrower must work with the lender to find the appropriate foreclosure avoidance approach, whether through VASP or another VA home loan option.
If VASP is the right program for a VA loan in default, once the loan is submitted by the VA lender, the agency purchases the loan. The defaulted loan is placed in the VA portfolio and is treated as a direct loan, meaning the VA services the mortgage from that moment as the lender.
The VA press release says this will empower the VA to work directly with eligible Veterans to adjust their loans—and their monthly payments—so they can keep their homes. Contact the Department of Veterans Affairs for more information on this program or how it may affect your VA mortgage.
VA Loan Foreclosure Avoidance Options
If you are in trouble with a VA home loan, there are a variety of options which do not include the VASP program described above. Before resorting to VASP, your participating lender may suggest one of the following options to avoid foreclosure on a VA home loan.
- Repayment plan: For borrowers who have “missed a few mortgage payments”, this option allows you to return to making mortgage payments at a higher monthly rate to make up for the missed payments.
- Special forbearance: The VA official site notes, “This plan gives you some extra time to repay the missed mortgage payments.” You and your lender must work out the details of a special forbearance to determine how much may be added to the end of the VA loan and how to pay after the special forbearance ends.
- Loan modification: the VA allows borrowers to “add the missed mortgage payments and any related legal costs to your total loan balance. You and your servicer then come up with a new mortgage payment schedule” under a VA loan modification program.
Related: VA Home Loan Guide
About the author
Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.
