VA to offer new loan assistance program for eligible veterans and families to avoid foreclosure

COLORADO, USA (KRDO) - Starting next month, the Department of Veterans Affairs (VA) will begin to offer its new Veteran's Affairs Servicing Purchase Program (VASP) to help tens of thousands of veterans avoid foreclosure on their homes.

Starting May 31, the VA expects their VASP to be able to assist upwards of 40,000 eligible veterans, active-duty service members, as well as surviving spouses with VA-guaranteed home loans who may be experiencing drastic financial hardship.

How will it work? The VA says it will cooperate with mortgage service providers by purchasing defaulted VA loans, modifying the loans, and then placing them in the VA-owned portfolio as 'direct' loans, which will assign a fixed 2.5% interest rate, for a consistent affordable payment.

The VA says that conversely, mortgage service providers will "identify qualified borrowers and submit requests on behalf of veterans based on a review of all home retention options available and qualifying criteria."

The VA says that veterans facing financial hardship should work with their mortgage servicers to explore available options as well.

Veterans Affairs anticipates that VASP will result in a reduction in government subsidy spending, saving approximately $1.5 billion from 2024 through 2033. They claim the service will benefit not only veterans, but also taxpayers, mortgage servicers, and loan holders, as it's much more cost-effective to avoid foreclosing and having to purchase a home altogether.

The VA advises that if you are having difficulty reaching a resolution with your mortgage servicer, you can call the VA at 877-827-3702 and select option 4. 

For more information on VA home loans, click here.