Consumer advocacy groups are urging the U.S. Department of Veterans Affairs (VA) to restore a program that provided veterans who were behind on their mortgage payments with a last-resort option to avoid foreclosure.

At an event held Tuesday at the House Triangle on Capitol Hill, representatives from the National Consumer Law Center (NCLC) and the National Fair Housing Alliance (NFHA) advocated for the immediate restoration of the Veterans Affairs Servicing Purchase (VASP) Program. They were joined at the event by House Committee on Veterans’ Affairs members Mark Takano, D-Calif., and Chris Pappas, D-N.H.

The temporary VASP program was established by the Biden administration in May 2024 as part of the broader VA Home Loan Program. The VA abruptly stopped accepting VASP applications on May 1, leaving veterans delinquent on their loan payments without an alternative VA mortgage assistance program.

Alys Cohen, a senior attorney at NCLC, said in a statement provided as part of the event that the cancellation of the VASP program “puts tens of thousands of veteran families with VA home loans at risk of losing their homes.”

“The termination of VASP results in veteran borrowers having substantially worse options than other borrowers with federally backed mortgage loans,” Cohen stated. “As a result, veterans with VA mortgages will face preventable foreclosures.”

Rep. Takano called the ending of VASP “cruel” during a press conference Tuesday, maintaining that its cancellation will result in more home foreclosures that will shift the cost burden onto the VA’s loan guarantee program and the taxpayers who fund the government department.

“The VA Home Loan Program is the loan guarantee program, and they guarantee lenders are made whole when a veteran loses their home. It’s the taxpayers that pay that guarantee,” Takano said. “It costs VA and every one of us an estimated $60,000 every time a veteran is foreclosed on. Foreclosure is the most expensive course of action.”

Republicans in Congress have criticized the VASP program as putting too much taxpayer money at risk. Rep. Derrick Van Orden, R-Wis., said on the House floor Monday that the program’s costs “had the potential to collapse” the VA Home Loan Program over time. He also faulted the lack of congressional input prior to the program’s implementation, and said that it’s his duty to make sure every active duty service member and veteran has access to the VA Home Loan Program.

“When an unelected series of bureaucrats invented a program that has not existed since someone first lent seashells to buy a cave, they greatly endangered that,” Van Orden said.

Legislative updates

Van Orden sponsored a bill called the VA Home Loan Program Reform Act, which is working its way through the legislative process. Positioned as a replacement for VASP, it would establish what’s known as a “partial claim” program, meaning the delinquent portion of a VA loan would be moved to the back end of the loan term and would be interest-free, giving the borrower five years to catch up on missed payments.

On Monday, that bill passed in the House of Representatives, leaving its fate in the hands of the Senate.

Jim Nabors, president of the National Association of Mortgage Brokers, who had previously spoken with Scotsman Guide in support of the bill, said in a statement Tuesday that the legislation is a “critical step toward housing stability for veterans.”

“It restores much-needed tools to help VA borrowers avoid foreclosure and keep their homes parity they’ve lacked since the abrupt end of the VASP program,” Nabors stated.

The consumer advocates from the NCLC and NFHA also support the passage of new legislation to establish a partial claims program for veterans facing financial hardship. But they argue that by canceling VASP, it leaves veterans without a viable option while the legislative process runs its course.

“We are committed to working with Congress on establishing a new hardship program,” said Cohen, the NCLC attorney. “But simply canceling VASP without a replacement will throw tens of thousands of veterans out of their homes.”