Honorable Few – Capt. J.J. Harris

Marine Corps League Detachment #1302

VA urges mortgage firms to extend foreclosure pause until next year

Veterans Affairs leaders are asking for mortgage servicers to pause nearly all foreclosures of department-guaranteed loans through the end of the year as officials launch new efforts designed to keep veterans in their homes.

The move comes just days before the start of the new Veterans Affairs Servicing Purchase (VASP) program, which will allow the department to purchase defaulted VA loans from outside mortgage servicers, then modify the terms to allow financially strapped veterans to maintain ownership of the properties.

Department leaders expect that effort will help about 40,000 veterans, troops and family members currently struggling with VA-backed home loans.

But others who do not qualify for the program could face property losses starting next month, when the current department-backed moratorium on foreclosures expires.

VA support program to buy up veterans’ defaulted home loans

VA Undersecretary for Benefits Joshua Jacobs said department officials cannot mandate that mortgage companies extend the foreclosure pause, but are working with the outside firms to try and prevent financial harm to veterans and their families.

“We’ve been talking to housing advocates that represent borrowers and we’ve been working with our interagency partners who are also providing home loans to Americans,” he said. “And we have been engaged in conversations, so we anticipate that the industry will comply with this targeted foreclosure moratorium.”

Officials could not provide an estimate on how many veteran loan holders are currently facing the possibility of defaulting on their payments.

The department has moved over the last two years to provide additional support services to VA home loan holders after a pandemic mortgage forbearance program expired in October 2022.

In addition to the new VASP program, veterans can apply for loan modifications and alternative repayment plans through department programs.

“When a veteran falls on hard times, we work with them and their loan servicers every step of the way to help prevent foreclosure,” Jacobs said. “So, today, we’re calling on mortgage servicers to follow this targeted foreclosure moratorium, so we can make sure that veterans get the support they need to stay in their homes.”

Conservative lawmakers have expressed concerns about the possible costs of the program, but VA leaders have argued that keeping veterans in homes will save more money than providing additional services to newly homeless veterans.

In a statement, House Veterans’ Affairs Committee Chairman Mike Bost, R-Ill., said the foreclosure extension is an important safety step but “it does not solve the long-term problem.”

“VA must put election year politics aside and find a permanent solution so that we do not jeopardize the integrity of the VA home loan program, veterans can stay in their homes, and we do not evolve into a financial burden of billions of dollars in bailouts for lenders,” he said.

The department is currently backing more than 3.7 million active home loans, including more than 400,000 new loans in 2023 alone.

Veterans facing problems with housing bills can contact VA at 877-827-3702, option 4, or visit the VA home loans website.