The Department of Veterans Affairs is winding down its
The government's Veterans Affairs Servicing Purchase Program, or VASP, will stop accepting new enrollees May 1, the VA confirmed in a statement Friday. The action won't affect existing VASP participants nor veterans who complete their enrollment in the program prior to that date.
Enacted last May, the VA via VASP has purchased 17,109 loans worth $5.48 billion. The program, VA Press Secretary Pete Kasperowicz stated, was a Biden administration move that lacked congressional authority.
"This change is necessary because VA is not set up or intended to be a mortgage loan restructuring service," wrote Kasperowicz. "This change will not impact VA's loan guaranty services for veterans."
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Thursday's announcement leaves the future of loss mitigation options for VA borrowers uncertain. The Mortgage Bankers Association in a statement Thursday evening urged the VA and lawmakers to implement a permanent partial claim option as veterans facing foreclosures could rise. Foreclosures on VA-backed properties
"Any characterization of VASP as a 'lender bailout' is patently false and entirely inappropriate, given that the mortgage industry voluntarily honored a foreclosure moratorium for months until the VA was able to provide VASP as the only available solution," said MBA President and CEO Bob Broeksmit in a statement.
House Republicans seeking to implement a partial claims program applauded the move Thursday. In a joint statement Thursday, House Committee on Veterans Affairs Chairman Mike Bost, R-Ill, and Subcommittee on Economic Opportunity Chairman Derrick Van Orden, R-Wis., blamed the Biden administration's VASP program for jeopardizing the future of the VA's home loan program.
"This [is] the right move by Secretary Collins and the Trump administration to protect the integrity of the VA home loan program, and today and tomorrow's veterans will undoubtedly be better off because of it," the lawmakers wrote.
Van Orden, in a separate individual statement, said VASP was created by "unelected bureaucrats at the VA in direct defiance of Congress." He introduced a bill in March, H.R. 1814, which would reinstate the partial claim until Sept. 30, 2027.
The department in 2022 ended its partial claim payment program, which converted missed payments to second-lien obligations. John Bell III, executive director of the VA's Loan Guaranty Program,
In a Capitol Hill hearing last month, Bell said he wanted more time to study Van Orden's partial claim bill and to weigh VASP's fate, but acknowledged the latter program was never intended as a long-term solution.
Bell didn't return a phone call seeking comment Friday.
According to House Committee Republicans, the VA was unable to show how individuals "would not take advantage of a 2.5% interest rate."
"Instead of reinstituting the partial claim for an average delinquency of $22,500, VA chose to purchase loans through VASP at an average of $292,000," read the statement from Bost and Van Orden.
Lawmakers claimed the average amount of loans purchased had increased to $320,000.
During last month's hearing, Elizabeth Balce, executive vice president of servicing at Carrington Mortgage Services testifying on behalf of the MBA, raised concerns over Van Orden's bill. Specifically, the bill didn't specify whether the partial claim option would be deducted from the VA's 25% loan guarantee if a mortgage defaults, potentially raising risks for lenders.
