VA Loan Cuts Left 15,000 Veterans With Higher Mortgage Bills

Thousands of veterans are paying more for their homes because the Department of Veterans Affairs ended a low-interest assistance program before a replacement was ready.

The change affected borrowers who had already fallen behind on their mortgage payments.

In the spring of 2005, the VA operated the Veterans Affairs Servicing Purchase, or VASP, program.

This program allowed veterans to roll missed payments into a new mortgage at a fixed 2.5% interest rate.

Key members of the House Veterans Affairs Committee argued that VASP placed a heavy burden on taxpayers.

Republican Rep. Derrick Van Orden of Wisconsin warned that the program threatened the long-term viability of the VA home loan portfolio.

Industry groups cautioned that ending VASP without a substitute would force veterans into loans at current market rates, which were around 7%.

The Trump administration terminated VASP on May 1, 2025.

House Republicans announced the move in a joint press release before the VA issued its own administrative order.

The new administration relied on the VA Partial Claim Program to replace VASP.

Congress passed legislation for this new program with broad bipartisan support.

The VA took more than 13 months to design the details of the Partial Claim Program, announcing them in June 2026, which is ten months after the source article's publication date relative to the current timeline, but the source states it was announced in June of this year (2026). The source says the VA announced it in June of this year. The source date is 2026-10-30. So June 2026 was five months ago. The source says 'it took the VA more than 13 months to design and announce.. which it did in June of this year.' This implies the design process started after May 2025 and ended in June 2026. That is 13 months. Correct. The industry then had 180 days to implement it. The deadline is Nov. 28, 2026. Most lenders have not yet offered the program to borrowers. As a result, thousands of veterans accepted loan modifications during the gap between programs. An NPR investigation found that more than 15,000 veterans saw their monthly payments rise by at least $150 after these modifications. More than 700 veterans faced increases of $1,000 or more. For most other American homeowners, loan modifications typically lower or maintain monthly payments. For veterans using VA loans, 63% saw their payments increase. This compares to a 2% increase rate for loans guaranteed by Fannie Mae and Freddie Mac. Scott Boyd of Columbus, Ohio, bought his home in 2021 with a VA loan at a 2.75% interest rate. He lost his job in a mass layoff and struggled with PTSD. His lender told him the VA forbearance program would help him catch up. When VASP ended, Boyd had no option but a new loan at a 6.75% interest rate. His monthly payment increased by $1,181, and his loan term extended to 40 years. The VA's new Partial Claim Program allows veterans to move missed payments to the end of their loan term, preserving their original interest rate. However, the program does not help veterans who already accepted modified loans. Scott Boyd signed his modification two weeks before the VA launched the new program. The VA has until Nov. 28, 2026, for mortgage companies to fully implement the Partial Claim Program. Rep. Mark Takano of California said the VA could retroactively restore lower-cost mortgages for affected veterans, or Congress could pass a law to do so. Foreclosures on VA loans have risen to a 10-year high since the termination of VASP.