The U.S. Department of Veterans Affairs (VA) announced on Thursday that it has officially terminated a crucial mortgage-rescue initiative, the VA Servicing Purchase program (VASP). This program has been instrumental in assisting approximately 20,000 veterans in avoiding foreclosure and retaining their homes. The abrupt cessation of VASP leaves millions of military veterans facing far bleaker options than most other American homeowners when it comes to managing their home loans during financial challenges.

As of now, nearly 90,000 VA loans are significantly overdue, with approximately 33,000 of those loans already in the foreclosure process, according to data from the analytics firm ICE. This situation exacerbates the vulnerability of veterans, many of whom find themselves at risk of losing their homes due to circumstances beyond their control.

The VASP program was initiated during the Biden administration in response to earlier missteps by the VA that left many homeowners unable to catch up on their VA-backed home loans. Under VASP, missed payments could be bundled into a new, low-interest loan that the VA would entirely own. Given the current surge in mortgage rates, which hover around 7%, this program had become an essential lifeline for veterans struggling to make their payments.

However, congressional Republicans have expressed strong opposition to VASP, claiming it poses excessive risk to taxpayer funds. In a recent statement to NPR, the VA articulated its decision to halt the program, stating, "[As of May 1,] VASP, which was unilaterally created by the Biden Administration and lacks congressional authority, will stop accepting new enrollees." This decision is particularly troubling to advocates in the mortgage industry, housing organizations, and veterans' groups, who have long warned that terminating VASP without a suitable alternative could lead to widespread home losses among veterans.

Mike Calhoun, president of the Center for Responsible Lending a nonpartisan organization advocating for the financial rights of underserved communities, including veterans voiced deep concern over the program's termination. He stated, "With the expiration of VASP, tens of thousands of Veterans and their families are now at significant risk of losing their homes," and urged Congress to urgently pass legislation to establish a new program to bridge the gap. He further advocated for the continuation of VASP until a new initiative is operational.

The plight of veterans left stranded by these changes is not new. Just two years ago, many veterans faced similar crises when the VA abruptly canceled a vital component of a pandemic-era mortgage relief program. This previous program had permitted veterans to defer mortgage payments during tough financial times. An NPR investigation revealed that approximately 40,000 veterans were at risk of losing their homes in late 2023.

Among those veterans is Kevin Conlon, who, along with his wife Jenny, resides in upstate New York, close to Fort Drum where he was stationed. After two combat tours in Iraq, Conlon, who struggled with PTSD and other mental health issues, was able to secure a VA loan that allowed them to purchase a home without a down payment. For the Conlon family, this house represents stability and a chance at a better life. "Without the VA loan, there was no way that we could have afforded to buy a house," Jenny remarked.

The VA home loan program has historically served as a crucial benefit of the GI Bill, offering veterans an opportunity to achieve homeownership and a foothold in the middle class. However, this support has unraveled for many veterans like the Conlons who were on a mortgage forbearance plan intended to provide relief during financial hardship by pausing monthly payments and eventually offering a path to catch up. After NPR highlighted the VA's decision to eliminate the only affordable option available for veterans, the VA temporarily halted foreclosures for a year while initiating the VASP rescue plan.

As the Conlons awaited their entry into VASP, they were instructed not to make any payments, which unfortunately resulted in accumulating arrears, leaving them increasingly anxious as they faced the possibility of losing their home. "I was willing to die for what I believed in. And for someone to take away the home that my family lives in? Like we've paid enough, we've really paid enough," Conlon expressed, reflecting the heavy emotional toll this situation has taken on him and his family.

In defense of the program's termination, VA spokesman Pete Kasperowicz stated, "This change is necessary because VA is not set up or intended to be a mortgage loan restructuring service." This justification has not satisfied many, particularly Republicans in Congress, who argue that the VASP program's reliance on taxpayer funds is misguided. They criticize the VA for buying loans from the mortgage industry and holding them on its own balance sheet, fearing significant financial losses if homeowners default again.

In light of this upheaval, Rep. Mike Bost, an Illinois Republican and chairman of the House Committee on Veterans' Affairs, along with Rep. Derrick Van Orden from Wisconsin, declared, "The Trump administration rightfully put an end to VA's VASP program." Van Orden has proposed a replacement program called a "partial claim" initiative, which aims to assist veterans by shifting missed payments to the end of their loan term, allowing them to repay these amounts later. However, the gap between the cessation of VASP and the potential implementation of Van Orden's bill remains wide, leaving countless veterans vulnerable to foreclosure.

Veterans' organizations, including the National Consumer Law Center and the Center for Responsible Lending, have issued warnings to Congress about the looming threat of preventable foreclosures that could harm both veterans and the government through increased financial liabilities. Their recent correspondence cautioned, "Without VASP or immediate access to alternative policy tools that provide relief, many of these homeowners will be forced to sell their homes and move or face foreclosure." While there is bipartisan recognition in Congress of the need to provide better options for veterans facing VA loan-related foreclosures, the timeline for enacting such legislation is uncertain.

Currently, veterans grappling with overdue mortgages find themselves facing far less favorable solutions than their counterparts with loans backed by Fannie Mae, Freddie Mac, or the Federal Housing Administration, all of which offer loss mitigation options to help homeowners recover missed payments without resorting to high-interest modified loans.

The sense of betrayal among veterans is palpable, with many expressing frustration over the VA's repeated failures to honor their commitments. Samuel McCrary, a Marine Corps veteran and father of three from Loganville, Georgia, described feeling "let down and deceived" after the VA ended new enrollments in VASP. He fears he may lose his home and lamented, "Losing my house and having to go rent it makes me sick to my stomach to think about." Meanwhile, veterans currently enrolled in the VASP program remain uncertain about their future, as many are in trial payment periods and are unsure if they will receive permanent VASP loans, depending on the VA's available funding.

Furthermore, veterans have increasingly voiced their feelings of being scapegoated for the VA's prior mistakes. During a recent hearing before the House Veterans' Affairs Subcommittee, Rep. Van Orden criticized VASP, calling it "moronic" and suggesting that it unfairly shifted the burden of poor loans onto taxpayers. This comment was met with outrage from veterans like Conlon, who feels it disrespects their sacrifices. "That was so hurtful because these are not bum loans, and they're making the veterans and their families out to sound like irresponsible people," Jenny Conlon stated.

As the couple navigates their uncertain future, they reflect on how they followed VA guidelines only to find themselves caught in a cycle of frustration and fear. Kevin, who had taken forbearance to seek treatment for PTSD, expressed deep mistrust in the VA's handling of the situation. "It's like, how do you justify cutting something that is to help the vets who were basically put in this position because of you?" he lamented. Inquiries about the VA's concerns over the potential loss of veteran homes following the termination of VASP have gone unanswered, as both the VA and Republican House leadership deferred responsibility back to one another, leaving veterans to question the fate of their homes amidst this ongoing crisis.