Senate lawmakers finalized plans Wednesday for a new home loan safety net program designed to prevent veterans from facing foreclosure, replacing a similar but controversial effort canceled by Veterans Affairs officials earlier this year.
The bill, known as the VA Home Loan Program Reform Act, had previously passed the House and now awaits President Donald Trump’s signature to become law. It would create a partial claim program for veterans who have fallen behind on housing payments, allowing them to defer a portion of what they owe on their mortgages.
In a statement, the Republican and Democratic leaders of the House and Senate Veterans’ Affairs Committee hailed the bill’s passage as an important step to protect veterans.
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“We are empowering VA to establish a partial claim program as an option of last-resort, which will preserve veteran homeownership and save taxpayer dollars by avoiding preventable foreclosures,” they said.
“No veteran should fall through the cracks or risk losing their home while a last-resort program is being implemented.”
The move comes less than three months after department officials announced the end of the Veterans Affairs Servicing Purchase (VASP) program, launched in late May 2024 to purchase defaulted VA loans from outside mortgage servicers.
Tens of thousands of veterans faced financial hardships during the Covid-19 pandemic because of lost work and mounting bills, but faced significant extra debts when emergency pandemic protections ended in May 2023.
About 17,000 veterans enrolled in VASP and received home loans with lower interest rates through the program, according to VA officials. But the effort drew sharp criticism from conservative lawmakers on Capitol Hill, who claimed it undermined the existing VA home loans program by providing too much financial aid to a select few veterans.
When administration officials ended VASP, Democratic lawmakers criticized its removal before a new safety net system could be passed into law. On Wednesday, they applauded the delayed replacement.
Officials could not say when the new partial claim program will be ready to accept applications. Lawmakers on Wednesday encouraged VA and mortgage lenders to “continue their collaboration as this program is implemented, ensuring that they help mitigate any impact on veterans facing financial hardship while VA takes the necessary steps to establish the new program properly.”
The legislation also allows VA to provide direct funding to transitional housing groups through the Grant and Per Diem program, a move that advocates for homeless veterans said will simplify the assistance process.
The measure had gained endorsements from the Mortgage Bankers Association, the National Association of Realtors, the National Coalition for Homeless Veterans, the Veterans of Foreign Wars and The American Legion, among other community groups.
Trump is expected to sign the bill into law in the next few days.
Leo covers Congress, Veterans Affairs and the White House for Military Times. He has covered Washington, D.C. since 2004, focusing on military personnel and veterans policies. His work has earned numerous honors, including a 2009 Polk award, a 2010 National Headliner Award, the IAVA Leadership in Journalism award and the VFW News Media award.
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