Even as most eviction/foreclosure moratoriums have expired, Vets Admin pushes for delay in VA-guaranteed loans

30 May 2024- Today, the Department of Veterans Affairs issued guidance to strongly encourage mortgage servicers to implement a targeted moratorium on foreclosures for Veterans with VA-guaranteed loans through December 31, 2024. This will help Veterans and their families stay in their homes beyond the end of the current foreclosure moratorium, which will end on May 31.

This new, targeted foreclosure moratorium will help ensure that Veterans and their families are able to stay in their homes while mortgage servicers implement the Veterans Affairs Servicing Purchase (VASP) program – a new, last-resort tool for qualified Veterans experiencing severe financial hardship. Through VASP, VA will purchase qualified Veterans’ modified loans from their loan servicers and then place them in the VA-owned portfolio as direct loans – making the loans more affordable for Veterans. VASP officially launches on May 31 and mortgage servicers must have it fully implemented by October 1, 2024.

Veterans facing financial hardship should contact their mortgage servicer and work with them to explore all available home retention options. For additional assistance, Veterans can always contact VA directly by calling 877-827-3702, option 4, or by visiting the VA Home Loans website for additional information.

“When a Veteran falls on hard times, we work with them and their loan servicers every step of the way to help prevent foreclosure, including offering repayment plans, loan modifications, and more,” said Under Secretary for Benefits Josh Jacobs. “We’re calling on mortgage servicers to follow a targeted foreclosure moratorium so we can make sure that Veterans get the support they need to stay in their homes.”

When a Veteran experiences financial hardship, VA has a range of options to help stay in their homes. VA’s home retention options include:

  • Forbearance Agreements: Temporarily reducing or pausing payments for those facing short-term financial difficulties. Loan payments will still be owed at the end of the special forbearance and will not be automatically put on the end of the loan.     
  • Repayment Plans: Arranging plans to catch up on missed payments gradually.
  • Loan Modifications: Adjusting loan terms to make monthly payments more manageable.
  • VASP: Once a Veteran has exhausted all other home retention options, they may qualify for VASP. With VASP, qualified borrowers will have a fixed 2.5% interest rate, which will provide a consistent, affordable payments for the remainder of their loan. (Importantly, Veterans will not apply directly for VASP. Instead, mortgage servicers for VA loans will consider VASP if all other home retention efforts have been exhausted.)

This targeted foreclosure moratorium will apply to all VA-guaranteed loans unless 1) the loan is secured by property that is vacant or abandoned, 2) the servicer has documented that the borrower desires neither to retain homeownership nor avoid foreclosure, 3) the servicer has not received a monthly payment for at least 210 days, and the borrower is not responding to the servicer’s outreach attempts, or 4) the servicer has evaluated the borrower for all home retention options but has determined that no home retention option, including VASP, or alternative to foreclosure will work for the borrower. For more information on the targeted foreclosure moratorium, please visit the VA Home Loan website.

VA and the Biden-Harris Administration are committed to doing everything possible to prevent foreclosures for Veterans and their families. Over the past several months, VA has strongly encouraged an initial foreclosure moratoriumextended its COVID-19 modification program (now extended through September 30, unless the mortgage servicer implements VASP sooner), and worked with Veterans directly to help them retain their homes. VA helped more than 145,000 Veterans and their families avoid foreclosure in 2023 alone.

For additional assistance, visit VA’s foreclosure support and prevention website.