The Department of Veterans Affairs will launch a new program next month designed to help keep more than 40,000 veterans experiencing severe financial hardship avoid foreclosure and stay in their homes.
The program — the Veterans Affairs Servicing Purchase (VASP) program — is a new last-resort tool in the VA’s arsenal of home retention options for eligible veterans, active-duty service members and surviving spouses with VA-guaranteed home loans who are dealing with severe money problems.
“This new program will help more than 40,000 veterans and their families stay in their homes, and there’s nothing more important than that,” VA Secretary Denis McDonough told the Temple Daily Telegram during a Tuesday conference call.
“We at VA are committed to doing everything in our power to help veterans avoid foreclosure, and that’s exactly why we’re launching VASP – to help the veterans who need it most,” he said.
Through the Veterans Affairs Servicing Purchase program, VA will buy defaulted VA loans from mortgage services, modify the loans, and then place them in the VA-owned portfolio as direct loans. 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.
With VASP, these borrowers will have a fixed 2.5% interest rate, which will provide a consistent, affordable payment for the remainder of their loan.
“When a veteran falls on hard times, we work with them and their loan servicer every step of the way to help prevent foreclosure — including offering repayment plans, loan modifications, and more,” said Under Secretary for Benefits Josh Jacobs.
“But some veterans still need additional support after those steps, and that’s what VASP is all about,” Jacobs added. “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.”
According to McDonough, veterans will not apply directly for VASP. Instead, beginning May 31, mortgage servicers will identify qualified borrowers and submit requests on behalf of veterans based on a review of all home retention options available and qualifying criteria. Veterans facing financial hardship should work with their mortgage servicers to explore available options.
The VA anticipates that VASP will result in a government subsidy spending reduction of approximately $1.5 billion from 2024 to 2033, making it beneficial for veterans, taxpayers, servicers, and loan holders alike. This is because the savings associated with avoiding foreclosures outweighs the cost of purchasing these homes.
Veterans who are having difficulty reaching a resolution with their mortgage servicer can contact VA at (877) 827-3702, option 4.
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