Program to Prevent Veteran Home Foreclosures Has Been Revived

A plan to help veterans struggling with mortgage payments stay in their homes is on track to become law after the Senate approved the proposal.

In a voice vote Tuesday night, the Senate passed a bill to create what's known as a partial claims program that will essentially allow veterans with Department of Veterans Affairs home loans to move skipped mortgage payments to the end of their loan term. The bill was previously approved by the House, meaning it just needs President Donald Trump's expected signature before becoming law.

"This bipartisan and bicameral legislation will assist veterans who are facing financial hardships and provide VA with a tool to better help veterans stay in their homes and avoid foreclosure," Senate Veterans Affairs Committee Chairman Jerry Moran, R-Kan.; Senate committee ranking member Sen. Richard Blumenthal, D-Conn.; House Veterans Affairs Committee Chairman Mike Bost, R-Ill.; and House committee ranking member Rep. Mark Takano, D-Calif., said in a joint statement Wednesday morning applauding the bill's passage.

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"We encourage the VA and mortgage servicers to continue their collaboration as this program is implemented, ensuring that they help mitigate any impact on veterans facing financial hardship while VA takes the necessary steps to establish the new partial claims program properly," they added.

The partial claims program will replace a Biden administration-era mortgage rescue program that the Trump administration ended this year and revive a COVID-19 pandemic-era program.

The VA temporarily created a partial claims program to help veterans whose normal stream of income was disrupted by the pandemic, but it ended the program in 2022, with officials maintaining they needed congressional approval to continue it.

As the program ended, thousands of veterans found themselves at risk of losing their homes when they started getting unaffordable bills for mortgage payments they had missed. After NPR reported on the issue, the Biden administration in 2024 created the Veterans Affairs Servicing Purchase, or VASP, program as an emergency fix.

VASP allowed the VA to purchase delinquent loans from holders, become the primary loan servicer and provide borrowers an affordable, stable payment plan.

Republicans, though, fiercely opposed VASP. They argued that the Biden administration acted without congressional approval and that taxpayer dollars were put at unacceptable risk by the VA becoming the loan holder.

The Trump administration ended VASP in May, prompting warnings from Democrats and the mortgage industry that up to 80,000 veterans could be at risk of foreclosure unless an alternative is in place.

Congress' approval of a partial claims program will establish that alternative.

The bill also seeks to help veterans experiencing homelessness by authorizing more funding for grants for transitional housing.

The Congressional Budget Office estimated that the bill as a whole will cost the government nothing since increased grant funding is balanced out by expected savings from the partial claims program reducing the amount of costs the VA will pay related to loan defaults.

Mortgage industry and veterans groups had urged the Senate to act quickly after the House passed the bill.

"The need for a permanent partial claim option is urgent," Bob Broeksmit, president and CEO of the Mortgage Bankers Association, said in a May statement. "Thousands of struggling veteran homeowners risk foreclosure without this swift legislative action and subsequent implementation of a VA partial claim program."

Related: Year-Old VA Mortgage Rescue Program Ended by Trump Administration