VA Support Program To Buy Up Veterans’ Defaulted Home Loans

“MILITARY TIMES” By Leo Shane III

“Starting next month, Veterans Affairs officials will offer a “last-resort” program for tens of thousands of veterans in danger of losing their homes because of post-pandemic mortgage problems.“

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“The new Veterans Affairs Servicing Purchase (VASP) program, which launches May 31, will allow the department to purchase defaulted VA loans from outside mortgage servicers, then modify the terms to allow financially strapped veterans to avoid losing the properties.

Borrowers will be guaranteed a fixed 2.5% interest rate for the remainder of their loans.

“This program will help ensure that when a veteran goes into default, there is an additional affordable payment option that will work in a higher-interest rate environment, so they can keep their homes,” VA Undersecretary for Benefits Joshua Jacobs said.

Department leaders estimate the new program will help about 40,000 veterans, troops and family members currently struggling with VA-backed home loans.

But the new program will only be open to veterans who have defaulted on their mortgages and not others who renegotiated higher, costly new mortgages over the last year. Those individuals will not be able to opt into the lower-rate VASP loans.

“This is not an incentive for default,” Jacobs said. “If other home-retention options like a loan modification or repayment plan will resolve the home loan delinquency, then this program will not be an option.”

When the coronavirus pandemic hit the United States in spring 2020, Congress approved a forbearance program allowing some individuals who lost their normal stream of income to skip mortgage payments for months.

But when that program ended in October 2022, thousands of veterans found they owed large payments on their homes, forcing some into default and others into unfavorable new home loans. An NPR investigation in 2023 uncovered numerous families hurt by the gaps in support services.

VA last fall called on all mortgage companies to delay additional foreclosures until May 2024 while they set up the new support program. Under VASP, veterans will not need to apply to be included, but will instead have their mortgages purchased by VA if they qualify.

Jacobs said VA planners estimate that the new program will produce about $1.5 billion in savings over the next decade by avoiding costs for housing vouchers, federal loan defaults, and other complications related to veterans homelessness.

The department is currently backing more than 3.7 million active home loans, including more than 400,000 new loans in 2023 alone.

Veterans facing problems with housing bills can contact VA at 877-827-3702, option 4, or visit the VA home loans website.“

https://www.militarytimes.com/veterans/2024/04/10/new-va-support-program-to-buy-up-veterans-defaulted-home-loans/

About Leo Shane III

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.

GAO Report – Pentagon Failing To Connect ‘At-Risk’ Exiting Service Members With Support Agencies

“TASK AND PURPOSE” By Nicholas Slayton

“The military calls it a “warm handover.” But data from the last two years shows that around 10% of troops transitioning to civilian life who were deemed at risk didn’t get the assistance the military is supposed to provide.”

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“It can be difficult for service members to reenter civilian life after their time in the military. For certain military members, who the Department of Defense deem as “at risk,” the military links them with other government agencies that can provide additional help, such as the departments of Labor and Veteran Affairs.

That’s according to a new report from the Government Accountability Office, released this past week. The GAO found that the Transition Assistance Program often does provide contact information to exiting troops, but does not guarantee that the service members actually connect with them, let alone get the support they need.

The report, ‘Service Members Transitioning to Civilian Life: Agencies Can Improve Warm Handovers for Additional Assistance,’ looks at cases from April 2021 to March 2023. It found that while the Department of Defense conducted a warm handover for at least 41,000 service members, another 4,300 didn’t get the assistance those handovers are supposed to provide. 

That puts these future veterans in a difficult position. Leaving the military means a loss of housing, healthcare and often work. In the two-year window the GAO looked at, 267,745 service members separated from the military. 15% of them were deemed at risk.

“According to DOD’s policy, service members who do not meet all applicable career readiness standards (such as developing a financial plan or completing an individual transition plan) are to receive a warm handover,” the report says. “The military is also to provide warm handovers to those who did not receive an honorable discharge, do not have a post-transition housing or transportation plan, identify as needing peer support, or are likely to face major readjustment, health care, employment, or other challenges associated with the transition to civilian life.”

Additionally, the GAO found that the military has not actually assessed if the warm handovers are effective or not. Transition Assistance Program counselors told the GAO that although they think these efforts can help, they lack any information to study how much they are helping, and how counselors can improve for the future.  

The GAO report lays out some recommendations for the military to address this. Many are procedural, outlining a need for updated contact information for supportive agencies and developing a system to better verify when at-risk service members do connect with agencies via a warm handover. Additionally it calls for better communication with the VA and Department of Labor to both guarantee exiting troops do connect, and that there is more data for verification.”

https://taskandpurpose.com/military-life/departmant-of-defense-troops-veterans-reentering-civilian-life-transition-program

ABOUT THE AUTHOR:

Nicholas Slayton is a contributing editor for Task & Purpose, covering conflict for over 12 years, from the Arab Spring to the war in Ukraine. His previous reporting can be found on the non-profit Aslan Media, The Atlantic, Al Jazeera, The New Republic, The American Prospect, Architectural Digest, The Daily Beast, and the Los Angeles Downtown News. You can reach him at nicholas@taskandpurpose.com or find him on Twitter @NSlayton and Bluesky at @nslayton.bsky.social. Contact the author here.