Trump Signs VA Home Loan Reform Act to Aid Veterans Facing Foreclosure

President Donald Trump recently enacted the VA Home Loan Program Reform Act. This legislation establishes a partial claims program designed to help veterans avoid foreclosure on their homes.

The new partial claims program, managed by the Department of Veterans' Affairs (VA) within its Home Loan Program, offers a solution for veterans struggling with mortgage payments. It allows them to add overdue payments to the end of their existing loan terms.

The Reform Act also aims to replace the Veterans Affairs Servicing Purchase (VASP) program. The VASP program, initiated during the Biden administration, was later discontinued by the Trump administration.

The VASP program involved the VA purchasing delinquent VA loans from mortgage servicers. The VA would then modify these loans and offer borrowers a fixed 2.5% interest rate for the remaining loan term. However, the VASP program faced criticism, particularly from Republicans. Concerns were raised about its implementation without congressional approval, potential risks to the VA home loan guarantee program, and the potential cost to taxpayers. The VA had purchased over 17,000 home loans, totaling over $5.48 billion, under the VASP program.

The House of Representatives approved its version of the VA Home Loan Program Reform Act in May, followed by the Senate's approval in July.

Leaders from the House and Senate Committees on Veterans’ Affairs issued a joint statement, emphasizing the bipartisan nature of the legislation. They highlighted its purpose of assisting veterans facing financial difficulties and providing the VA with a tool to prevent foreclosures. The statement also underscored the value of the VA Home Loan Program, which has been a significant benefit for veterans and their families since its inception in 1944.