The Department of Veterans Affairs (VA) has introduced a new program aimed at assisting veterans who are facing foreclosure due to financial difficulties caused by the pandemic. The program, called Veterans Affairs Servicing Purchase program (VASP), is set to help over 40,000 veterans who are at the highest risk of losing their homes.
Many veterans found themselves struggling financially after the VA abruptly ended its COVID mortgage forbearance program in 2022. This left thousands of veterans in a difficult position, as they were suddenly required to come up with all missed payments at once, rather than having them added to the back of their loan.
Unfortunately, not all veterans may qualify for the new VASP program, especially those who accepted higher-cost loan modifications following the mortgage forbearance. Data suggests that thousands of veterans ended up with modified loans carrying significantly higher interest rates.
The VASP program requires borrowers to have made payments for at least six months and be in default for at least three months to be eligible. While some experts argue that borrowers shouldn’t have to pay six months on a bad modification to qualify, the program offers a fixed 2.5% interest rate for the remainder of the loan for those who do qualify.
Combat veteran Edmund Garcia, who never accepted a costly loan modification, may qualify for VASP but could potentially be put into a 40-year mortgage. Despite some potential drawbacks, veterans like Garcia see the new program as a lifeline for their families and are hopeful for assistance in saving their homes.
Veterans are advised to work closely with their mortgage company and VA loan technicians if they need help navigating the VASP program. The VA is committed to providing support to those who have served our country and are now in need of assistance to prevent foreclosure.
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