Veterans struggling to pay their mortgages could get help under a plan approved by the House to replace a mortgage rescue program the Trump administration ended this month.
The House approved by voice vote on Monday night a bill that would create a partial claims program for the Department of Veterans Affairs. The program would essentially allow veterans with VA home loans who need to skip mortgage payments to move those missing payments to the end of their loan term.
The bill, if ultimately approved by the Senate and signed into law, could provide a lifeline to veterans who are at risk of foreclosure following the end of the Veterans Affairs Servicing Purchase program this month.
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"It was a bad program, and the Trump administration was right to stop it. However, I recognize that sometimes veterans fall on hard times and veterans need a safety net," House Veterans Affairs Committee Chairman Mike Bost, R-Ill., said on the House floor.
The bill approved Monday "is a fiscally responsible solution to enhance the VA home loan program and give veterans the assistance they might need if they are in home loan debt," Bost added.
The VA had a partial claims program during the COVID-19 pandemic when many veterans, like others around the world, struggled to pay bills because their normal stream of income was disrupted. But that partial claims program ended in October 2022.
When the program ended, thousands of veterans found themselves receiving unaffordable bills for mortgage payments they had missed.
After NPR reported on the issue last year, the Biden administration created the Veterans Affairs Servicing Purchase, or VASP, program as an emergency fix.
Under VASP, the VA purchased delinquent loans from holders and became the primary loan servicer, providing borrowers a stable payment plan at a fixed rate of 2.5% for the remainder of their loan.
The program helped about 17,000 veterans stay in their homes, while the VA purchased about $5.5 billion worth of loans through the program, according to the department.
But Republicans opposed VASP, arguing that the Biden administration acted without congressional approval and that taxpayer dollars were put at unacceptable risk by the VA becoming the loan holder.
Last month, the VA announced that it was ending VASP, effective May 1. While veterans already on VASP weren't kicked off, the department stopped accepting new applications on that date.
VASP "should have never started to begin with," VA Secretary Doug Collins said at a House Veterans Affairs Committee hearing last week, claiming that the Veterans Benefits Administration was on the verge of needing to shuffle around billions of dollars from other programs to cover VASP costs.
"It should not have been a program that was taking money away from other things to start and getting VA into the mortgage business," he said.
Democrats fumed at Collins' decision, arguing that ending VASP without an alternative in place put 80,000 veterans at risk of foreclosure.
The bill approved by the House on Monday would provide the alternative by giving the VA the authority to create a new partial claims program.
The partial claims program could save the government about $170 million over a decade by reducing the amount of costs the VA pays related to loan defaults, according to the Congressional Budget Office.
The bill, which was first introduced by Rep. Derrick Van Orden, R-Wis., received bipartisan support after negotiations added some more protections Democrats were seeking for veterans who missed mortgage payments from March 2020, when the COVID-19 pandemic started, to May 1, when VASP ended.
Still, Democrats are continuing to blast the VA for not taking more steps to ensure veterans aren't foreclosed on while the bill works its way through Congress.
"I continue to urge the secretary to reinstate some kind of assistance for veteran borrowers until this legislation is signed into law and implemented," Rep. Mark Takano, D-Calif., the ranking member of the House Veterans Affairs Committee, said on the House floor Monday. "That will take some time. Every veteran who loses their home will have no one to blame but President Trump and Secretary Collins."
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