The Senate has passed a long-awaited fix for veterans designed to keep many from losing their homes, after a series of stumbles by the VA left thousands of veterans on the verge of foreclosure.
Members of Congress have scrambled to pass such a solution since May, when the Department of Veterans Affairs abruptly ended a Biden-era homeowner assistance program and left veterans with far worse options than most other Americans who never served.
Mortgage industry executives, veterans' groups, and housing advocates have been calling on Congress and the VA to come up with a replacement measure. Congress now appears to have done that, in a rare show of bipartisanship. To underscore that point, the leaders on the veterans' affairs committees from the House and Senate released a joint statement on the passage of the bill.
"This bipartisan and bicameral legislation will assist veterans who are facing financial hardships and provide VA with a tool to better help veterans stay in their homes and avoid foreclosure," said the statement, signed by Sens. Jerry Moran of Kansas, a Republican, and Richard Blumenthal of Connecticut, a Democrat. The letter was also signed by Republican Rep. Mike Bost of Illinois and Democratic Rep. Mark Takano of California.
"The VA Home Loan Program provides one of the best benefits VA has to offer, and has helped veterans and their families build home equity since its inception in 1944," the lawmakers said.
If signed into law by the president, the new law will help veterans who have fallen behind on their mortgage payments by moving those missed payments to the back of their loan term, making their loan current so they can start paying again and avoid foreclosure. The missed payments will get paid down the road when they refinance, sell their home, or after they've paid off their mortgage.
The action by Congress is the latest development in a VA mortgage saga that has sent veterans lurching between various enacted and canceled programs and left thousands in fear of losing their homes.
And the blame for that is also bipartisan.
Most American homeowners who fall behind on their mortgage payments have affordable options for catching up. But a series of self-inflicted crises in the VA's normally stable home loan program had left veterans in the lurch at a time when 79,000 vets and active-duty troops are delinquent and heading toward foreclosure, according to data from ICE Mortgage Technology.
First, in a misstep in 2022 during the Biden administration, the VA scuttled a previous program that had allowed vets to move missed payments to the back of their loan term.
After an NPR investigation revealed that the VA's move had left thousands of veterans facing foreclosure, the VA called on mortgage companies to halt all foreclosures for one year while it rolled out a rescue program — the VA Servicing Purchase program, or VASP. The program ultimately helped 33,000 vets avoid foreclosure.
Then Republican opposition to VASP pushed President Trump's VA secretary to abruptly cancel it on May 1, leaving tens of thousands of other veterans without a safety net once again.
VASP helped homeowners by giving them a new low-interest-rate loan that the VA held on its own books, and Republicans feared the program would be too costly over time.
But the VA scuttled it without replacing it with anything else. And with mortgage rates of around 7% that meant the other option for a VA loan, a loan modification, often sharply increased the monthly payment, making it unaffordable. So since May 1, mortgage companies have been telling many veterans they have to choose between selling their homes or facing foreclosure.
The law just passed by Congress should change that once the VA implements the new safety net program.
" We're delighted that Congress has fixed this inequity," said Bob Broeksmit, president of the Mortgage Bankers Association.
"Veterans were just about the only type of mortgage borrower in this country that did not have this loss mitigation option… it's a proven method that will help thousands of veterans," Broeksmit said.
The bipartisan statement from Congress urged the VA and mortgage servicers to help veterans stay in their homes while the VA sets up the new program. Some in Congress have called on the VA to explicitly ask mortgage companies to pause foreclosures in the meantime.
The VA did not immediately respond to NPR about whether it will ask mortgage companies for a foreclosure moratorium and how long it will take to implement the new program, but press secretary Pete Kasperowicz said "We appreciate Congress's work on the VA Home Loan Program Reform Act, which VA will implement once President Trump signs it into law."
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