Trump Administration VASP Termination Spikes Veteran Mortgage Payments

The Trump administration terminated the Veterans Affairs Servicing Purchase (VASP) program on May 1, 2025, causing thousands of military veterans to face significantly higher mortgage interest rates and monthly payments. The VASP program, established under the Biden administration, had allowed veterans in financial distress to roll missed payments into new mortgages at a 2.5% interest rate. Following its end, many veterans were forced into loan modifications at market rates near 7%.

An NPR investigation revealed that over 26,000 veterans faced payment increases, with 63% of those receiving modifications seeing higher costs. More than 15,000 veterans saw monthly payments rise by at least $150, and over 700 experienced increases exceeding $1,000. These financial pressures contributed to VA loan foreclosures reaching a 10-year high.

While Congress passed legislation to create the VA Partial Claim Program (PCP) as a replacement, the United States Department of Veterans Affairs took over 13 months to design and announce the program. This gap left many veterans stuck in expensive modified loans, and the PCP does not provide relief to those already affected by the VASP termination.

House Republicans, including Committee Chairman Mike Bost and Representative Derrick Van Orden, supported the termination, arguing that VASP risked the stability of the broader VA home loan program. Conversely, Ranking Member Mark Takano and the Housing Policy Council warned that ending the program without an immediate replacement would lead to the current foreclosure crisis.