Will VA foreclosures rise further? Veterans with modified loans face higher monthly payments after VASP ended, and the new partial claim program does not help them

Thousands of veterans with VA-backed home loans are now paying higher interest rates and bigger monthly instalments after the US government ended a relief programme last year. This is according to an NPR investigation based on VA data that had not been made public before.

NPR found that among veterans whose loans were modified after a financial hardship, more than 15,000 saw their monthly payment rise by at least $150. Over 700 saw an increase of $1,000 or more. About 63% of VA loan modifications raised the payment, compared with just 2% for loans backed by Fannie Mae and Freddie Mac.

Why VA loan payments went up after the VASP shutdown

The Veterans Affairs Servicing Purchase (VASP) programme was created under the Biden administration. It let veterans who had missed payments roll the dues into a new loan at a 2.5% interest rate. Tens of thousands of borrowers used it.


The Trump administration ended VASP on May 1, 2025, through an administrative decision, without a vote in Congress.

Republican lawmakers on the House Veterans’ Affairs Committee, including Chairman Mike Bost and Rep. Derrick Van Orden, had opposed it. They said it put taxpayers at risk and could threaten the future of the VA home loan programme.

Mortgage industry groups had warned the government not to end VASP before a replacement was ready. With market rates near 7%, they said, veterans would be left with modified loans at much higher rates.

Matthew Douglas of the Housing Policy Council told NPR that the payment jumps were a foreseeable result.

A veteran’s payment rises by $1,181 a month

Scott Boyd, an Army veteran who served in the infantry and later in intelligence, bought a home near Columbus, Ohio, in 2021. He lost his job in a mass layoff and was treated for PTSD at the Dayton VA hospital. He then fell behind on his mortgage.

His lender told him a VA forbearance programme would help him catch up. When VASP was gone, he was offered only a loan modification. His interest rate went from 2.75% to 6.75%, his loan term was stretched to 40 years, and his monthly payment rose by $1,181. Earlier, about half of his payment went towards the principal. Now over 90% goes to interest.

Boyd lives with his partner, her four children and, until recently, his dying father-in-law. He accepted the modification because the other option offered to him was foreclosure.

Congress passed a bill by Van Orden with wide bipartisan support to replace VASP with a Partial Claim Program (PCP). It lets veterans move missed payments to the end of the loan, so they can keep their original loan and rate.

The VA took over 13 months to announce the details, which it did in June. Lenders were given 180 days, until November 28, to set it up, and most still do not offer it. Boyd signed his modification just two weeks before the PCP launched. The new programme does not help veterans already in modified loans.

Industry data show VA foreclosures have reached a 10-year high since VASP ended. Experts warned at a congressional roundtable in September that more may follow.

The VA said it helps thousands of veterans keep their homes through forbearance, modifications and repayment plans. VA spokesman Quinn Slaven said the loan programme is built on the idea that veterans must generally be able to pay their mortgage.

Rep. Mark Takano, the top Democrat on the committee, said the VA or Congress could move affected veterans back into lower-cost loans.

Source: NPR investigation