15,000 Veterans Face Payment Jumps Of At Least $150 After VA Program Ends

The Department of Veterans Affairs ended the Veterans Affairs Servicing Purchase program on May 1, 2025, a move that removed a low-interest restructuring option for military borrowers who had fallen behind on home loans. The program had been created by the Biden administration to consolidate missed payments into a new mortgage carrying a 2.5% interest rate. Following the shutdown, borrowers who required assistance were instead offered loan modifications based on prevailing market rates.

Data obtained from the VA shows that more than 15,000 veterans who received loan modifications saw their monthly payments increase by at least $150. Among that group, over 700 individuals experienced increases of $1,000 or more. These adjustments occurred as a direct result of the program's closure, which left the agency without the specific tool designed to keep payments affordable during financial distress.

The rate of payment increases for VA borrowers stands in sharp contrast to the rest of the mortgage market. According to the data, 63% of veterans receiving loan modifications experienced higher payments. In comparison, only 2% of modifications involving loans guaranteed by Fannie Mae or Freddie Mac resulted in an increase.

Rep. Mark Takano, the ranking member of the House Veterans' Affairs Committee, described the situation as 'the height of insanity.' Takano noted that these are veterans who are 'already financially distressed.' Regarding the loan modification issued to Scott Boyd, a veteran near Columbus, Ohio, Takano stated that the VA home loan program should not create additional stress for a combat veteran.

Boyd, who served in Army intelligence and left the military in 2002, purchased a home in 2021 using a VA loan. After losing his job and entering treatment for PTSD at the Dayton VA hospital, he fell behind on his mortgage. His lender informed him he could use the VASP program to pause payments, but the option was discontinued before he could access it. Boyd signed a loan modification that raised his interest rate from 2.75% to 6.75% and extended his loan term to 40 years, increasing his monthly payment by $1,181.

Rep. Mike Bost, chairman of the House Veterans' Affairs Committee, and Rep. Derrick Van Orden, a committee member who advocated for ending VASP, did not respond to requests for comment. In a joint press release issued in May 2025, Bost and Van Orden stated that they had concerns regarding the program's impact on the future of the VA home loan program and the mortgage lending business.

Housing industry groups warned Congress and the administration that terminating VASP without a replacement would leave veterans with fewer options than other homeowners. Matthew Douglas of the Housing Policy Council, which represents major U.S. mortgage companies, said the outcome was a mathematical certainty given the interest rate environment. Industry data indicates that foreclosures on VA loans reached a 10-year high following the program's end.

Congress passed legislation directing the VA to create a Partial Claim Program that allows borrowers to move missed payments to the back of the loan term. The agency announced details for the program in June 2026, more than 13 months after VASP ended. Mortgage companies were given 180 days to implement the new system, with a deadline of Nov. 28, 2026. This program does not assist veterans who already signed higher-rate modifications.

VA press secretary Quinn Slaven stated that the agency helps veterans retain homeownership through forbearance, loan modifications, and repayment plans. Slaven added that the loan program operates on the premise that veterans must generally be able to make their mortgage payments. Boyd continues to make the increased payments on his home, where he is raising four children and recently cared for his father-in-law.