More than 10,000 veterans have lost their homes to foreclosure since May of last year, and another roughly 90,000 are behind on mortgages or in the foreclosure process, after the Department of Veterans Affairs shut down a key safety net in the VA home loan program, industry data shows. That pace is the highest for VA-backed loans in a decade.
The crisis traces back to a mistake in October 2022, when the VA abruptly closed a pandemic-era forbearance policy that had allowed skipped mortgage payments to be deferred. Many struggling veterans who used the program were told they suddenly had to repay a year of skipped payments in a lump sum or refinance at current, much higher interest rates — a choice most could not afford. An NPR investigation in late 2023 found tens of thousands of veterans trapped by that decision; the VA then halted foreclosures for a year while it developed a fix.
The VA’s rescue program, the VA Servicing Purchase program (VASP), was designed to help by converting delinquent borrowers into new, affordable mortgages. By early 2025, VASP had already provided more than 33,000 veterans new low-cost loans with interest rates around 2.5 percent. Mortgage industry officials and housing advocates said the program was preventing foreclosures and helping veterans stay in their homes.
But on May 1, 2025, the new administration abruptly ended VASP amid concerns about cost, giving servicers and VA staff roughly one week’s notice. Veterans already enrolled kept their loans, but no new veterans could enter the program. Mortgage industry warnings that shutting down VASP without a replacement would trigger widespread foreclosures proved prescient. “Foreclosure. Period. That’s really where it’s gonna come to,” Elizabeth Balce of the Mortgage Bankers Association warned at a House hearing in March 2025.
Since the program’s closure, servicers have steered many veterans into loan modifications that often raise interest rates and monthly payments — sometimes dramatically — because VA homeowners who fall behind no longer have the same non-price options available to borrowers with other federal mortgages. Over the past year, mortgage rates moved from around 3 percent to as high as 7 percent, so a modification at today’s rates can add hundreds of dollars to a veteran’s monthly bill. Examples reported by NPR include:
– Jon Henry, an Army veteran in Kansas City, whose modified loan increased his monthly payment by about $380.
– Shante and Mark Benfatto, where Shante (100% disabled) said their modification raised payments roughly $300 a month and late fees added about $105.
– Jerome Thomas, an Air Force vet in Florida, whose payment rose by about $800 and whose rate more than doubled to 6.8 percent; he says he was told to accept the modification or face foreclosure.
Some mortgage industry data indicates that at least some veterans who were foreclosed after VASP’s closure would likely have qualified for the program and been able to remain in their homes had it remained open. ICE Mortgage Technology, which tracks foreclosures, shows the spike in VA loan foreclosures since the program ended.
The VA says it is developing a new program that would allow veterans to move missed payments to the back of their loan — preserving the original mortgage and interest rate — which could help many borrowers with relatively low historic rates. But the draft plan contains a significant qualifier: if a modified loan at a higher rate raises a veteran’s monthly payment by up to 15 percent, servicers would be required to place the borrower into that higher-cost modification instead of using the option to defer missed payments. Under that draft, a borrower with a $2,000 payment could be pushed into a modification adding up to $300 monthly, without being offered the deferred-payment alternative.
The Mortgage Bankers Association and housing advocates warn that the draft “waterfall” of options still leaves veterans worse off than similarly situated non-veterans and said payment-increasing modifications should be a last resort because they drive redefault risk. Pete Mills of the MBA wrote the VA to recommend restructuring the hierarchy of options so increased monthly payments are used only after other alternatives.
Advocates are also urging servicers to pause foreclosures until the VA’s new program is operational — which VA officials say will take months — to avoid additional, preventable home losses. “We should have something in place to try to stem people from losing their homes,” said Steve Sharpe of the National Consumer Law Center.
The human toll is clear in individual cases. Leann Ledford and her husband in Spokane, Wash., bought a home with a VA-backed loan in January 2021 after a period of severe hardship: her husband, a Marine wounded in Afghanistan with PTSD and a brain injury, spent months unable to work while disability paperwork moved through the VA, and the family lived in a trailer for six months. When they fell behind after costly home repairs in 2022, their lender put them into forbearance based on VA guidance that payments could be deferred. After the VA’s 2022 policy change, they were told to repay skipped payments they couldn’t afford. They applied for help through VA loss mitigation but were not allowed to resume regular mortgage payments and ended up trapped in a process that dragged on for years.
VASP might have saved them, but the program was shut before they were enrolled. Their home was sold at a foreclosure sale and is now owned by the VA; they were offered $3,500 “cash for keys” and told to leave. Ledford said she found out the foreclosure sale had occurred only when someone knocked on their door. The family’s stability and her husband’s health have suffered; he has begun having seizures again. VA press materials said the agency “worked tirelessly with the Ledford family” and noted that per federal law the program assumes veterans generally must be able to make mortgage payments. The VA also said it stands ready to assist the family with health care services.
VA officials did not answer detailed questions about why the agency ended VASP without an immediate replacement or whether anything can be done now to keep families like the Ledfords in their homes. Housing groups warn that without prompt action to delay foreclosures and to ensure the new program prioritizes payment preservation rather than higher monthly payments, thousands more veterans will face eviction or unaffordable loans.
NPR previously reported that about 40,000 veterans were trapped by the 2022 policy change and that the VA temporarily halted foreclosures in 2023 while developing a remedy. VASP’s rapid expansion in early 2025 showed it could work at scale; its abrupt closure and the gap before a replacement has accelerated foreclosures and put many veterans in worse positions than other homeowners when they fall behind.