Veterans hit with higher mortgage payments after VA cuts loan program: report
According to NPR, the Trump administration ended the Veterans Affairs Servicing Purchase (VASP) program on May 1, 2025 without action from Congress (Getty Images)
Over 26,000 U.S. military veterans are now paying more for their mortgages each month – many with monthly increases of $1,000 or more – after the Trump administration killed a program designed to help veterans who are facing financial hardship.
According to an investigation by NPR, the Department of Veterans Affairs and House Republicans were warned that shutting down the program without an alternative in place would lead to higher payments and foreclosures.
Veterans loan changes
The backstory:
The Veterans Affairs Servicing Purchase (VASP) program helped veterans who were behind on their VA-backed home loan payments by moving missed payments onto a new mortgage with a 2.5% interest rate – far lower than average interest rates that are currently hovering around 7%.
It was started by the Biden administration - without congressional approval, according to the VA - after its own misstep forced thousands of veterans into higher mortgage payments.
According to NPR, the Trump administration ended the VASP program on May 1, 2025 without action from Congress, though some House Republicans had been vocally opposed to the program and wanted to see it shut down. The program ended not long after it was discussed at a congressional hearing where the mortgage industry and housing groups warned against stopping it without a viable alternative. They said it would lead to higher mortgage payments and more foreclosures.
By the numbers:
NPR reviewed more than 40,000 VA loan modifications from May 2025 through September 2026. The data showed 63% of veterans who received a loan modification saw higher monthly payments, though the VA says there's no way to know whether those veterans would have qualified for VASP. For loans guaranteed by Fannie Mae and Freddie Mac, which cover most of the U.S. mortgage market, only 2% of people who modified their loans saw higher payments.
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Among the more than 26,000 veterans who saw higher payments, over 15,000 of those payments went up by at least $150. For more than 700 veterans, their monthly mortgage payments went up by $1,000 or more.
NPR said foreclosures on VA loans hit a 10-year high after the VA ended the VASP program, but the VA says that's not true.
"There were more foreclosures in 2023 than 2025 when VASP ended," the VA said.
VA responds
What they're saying:
In a statement to FOX Local, the VA said the department has guaranteed more than 29 million home loans since the loan program started.
"Per federal law, the program is based on the premise that while Veterans may need some assistance, they must generally be able to make their mortgage payments," the VA said.
"When Veterans are unable to make their payments, the department works with mortgage servicers to keep hundreds of thousands of Veterans per year in their homes while avoiding foreclosure.
"In FY25 and FY26, VA has helped more than 330,000 borrowers retain homeownership and/or avoid foreclosure through programs like payment forbearance, loan modifications and individualized repayment plans.
"If, after all options are exhausted, a Veteran is still unable to make their mortgage payments, the decision to foreclose on the Veteran rests solely with the mortgage servicer — not VA."
New program won’t help vets already stranded
What's next:
After the VASP program was shut down, Congress enacted a new VA Partial Claim Program to help struggling vets by moving missed mortgage payments to the back of their loan. But according to NPR, it took more than 13 months for the VA to establish the new program in June. And most mortgage companies still don’t offer it because they’ve been given six months to implement it.
The new program also won’t help the 26,000-plus veterans who already got modified loans and ended up with higher monthly payments.
"VA’s partial claims program is fully operational and has been since June. It was enacted after many leading voices in Congress supported the termination of VASP, which put the entire VA home loan program at risk by forcing the Department to take on billions of dollars in risky mortgage debt," the VA said.
The Source: This report includes information from NPR and statements from the Department of Veterans Affairs.