VA Home Loan Servicing Purchase Program Ends
The U.S. Department of Veterans Affairs (VA) announced that it will end the Veterans Affairs Servicing Purchase program (VASP) on May 1, 2025. The program, which opened in late May 2024, was intended as a rescue program to assist veterans with VA home loans facing foreclosure after the end of COVID-19 mortgage forbearance programs.
Veterans Affairs Servicing Purchase Program Sunset 1 May 2025
The VA official site describes VASP as “a last-resort option for keeping your home when your loan servicer has determined that no other option can help you avoid foreclosure.”
A participating VA lender will consider the other options first, “…are repayment plans, special forbearances, or loan modifications. If none of these will work for your situation, they’ll review the required criteria for VASP to determine if your loan qualifies. Tell your servicer right away if your financial situation changes.”
VASP isn’t a program that you apply for as the borrower. VA.gov notes, “If your servicer determines that VASP is the only option for keeping your home and you want to participate, they will submit your information to VA.”
According to the VA, VASP helped over 17,000 veterans and their families avoid foreclosure by providing new, low-interest-rate, affordable mortgages.
However, VA officials have stated that VASP is being shut down because the agency is “not set up or intended to be a mortgage loan restructuring service.”
This decision has raised concern among veterans’ advocacy groups, housing advocates, and mortgage industry executives. Some feel ending VASP without a clear alternative could lead to an increase in veteran foreclosures.
What to Know About the End of VASP
The end of VASP is not intended to affect veterans currently enrolled in the program or those who complete their enrollment before May 1, 2025. However, after this date, no new signups are possible.
Established in 1944 as part of the Servicemen’s Readjustment Act, the VA home loan program was designed to assist servicemen and women returning from World War II in rejoining civilian life.
A key component? Access to affordable housing, and a pathway to building long-term stability and wealth through homeownership.
The cornerstone of the VA home loan benefit is the VA guarantee provided to private lenders. Because of this guarantee, lenders can offer more favorable terms than conventional mortgages. The VA home loan program offers different types of home loan to meet the diverse housing needs of eligible individuals.
These include:
- Purchase loans help veterans buy, build, or improve a home.
- Cash-out refinance loans allow homeowners to take cash out of their home equity.
- VA interest rate reduction refinance loans (IRRRLs), also known as streamline refinances, help lower monthly mortgage payments.
- VA Native American Direct Loans (NADLs) assist eligible Native American veterans in purchasing, constructing, or improving homes on federal trust land.
The Veterans Affairs Servicing Purchase Program offered stability and support within the home loan market. VASP essentially acts as a mechanism for the VA to purchase defaulted VA-guaranteed loans from private lenders. This intervention allows the VA to manage the servicing of these distressed loans, often focusing on loss mitigation strategies to help veterans avoid foreclosure and retain their homes.
VASP recognized the unique financial hardship some veterans face, including service-related disabilities, unemployment, and the challenges of transitioning back to civilian life.
Future Concerns
The potential end of VASP in 2025 raises concerns about the future of VA loan servicing. Will these changes hurt veterans? If the Department of Veterans Affairs no longer directly purchases defaulted loans, the responsibility for these loans may fall entirely back on participating VA lenders, which may offer challenges.
Alterations to VA policy that make it more difficult for veterans to retain their homes in times of financial hardship could have broader social and economic consequences.
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.
