The Veterans Affairs Servicing Purchase (VASP) program will purchase qualified veterans’ modified loans from loan servicers and place them in a VA portfolio as direct loans, making the loans more affordable for veterans, the VA said Wednesday.
With VASP, qualified borrowers will have a fixed 2.5% interest rate. Veterans do not apply directly for the program. Instead, mortgage servicers for VA loans will consider VASP if all other home retention efforts have been exhausted, the government said.
The program officially starts Friday, and the VA said mortgage servicers must have it implemented by Oct. 1, 2024.
“Veterans facing financial hardship should contact their mortgage servicer and work with them to explore all available home retention options,” the VA said. “For additional assistance, veterans can always contact VA directly by calling (877) 827-3702, option 4, or by visiting the VA Home Loans website.”
“When a veteran falls on hard times, we work with them and their loan servicers every step of the way to help prevent foreclosure, including offering repayment plans, loan modifications, and more,” Under Secretary for Benefits Josh Jacobs said in a statement. “We’re calling on mortgage servicers to follow a targeted foreclosure moratorium so we can make sure that veterans get the support they need to stay in their homes.”
The department backs more than 3.7 million active home loans, including more than 400,000 new loans from 2023.
The VA said it has a few options to help veterans stay in their homes, including forbearance agreements, which temporarily reduce or pause payments for those facing short-term financial difficulties, and new repayment plans to catch up on missed payments.
The moratorium will also not apply if the servicer has not received a monthly payment for at least 210 days, and the borrower is not responding to outreach attempts, or if other conditions apply.
The Montgomery County Veteran Services Commission sees veterans who need a hand with mortgages or rent quite often. Sometimes, all it takes to stave off a foreclosure or an eviction is a phone call to a bank or a landlord, said Bryan Suddith, a spokesman for the commission.
The VASP program helps only those who have a VA-backed loan, Suddith noted.
“Foreclosure issues, I would say those affects veterans as much as anybody else,” said Steven Strain, a Dayton attorney who works with the commission. “A lot of our veterans are kind of on a fixed income.”
One property tax increase, or the breakdown of a car, “and it starts to snowball,” Strain added.
Veterans who need a hand can call the commission office at (937) 225-4801. Both Suddith and Strain advise veterans not to wait if they need help. The sooner they reach out, the more readily advocates might be able to assist.
“It’s that first month that they need to call,” Suddith said.
“Time is not on the veterans’ side in these situations,” Strain said.
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