More than 10,000 veterans have lost homes to foreclosure since May of last year, and roughly 90,000 more are delinquent or in the foreclosure pipeline, industry data shows — the fastest pace of VA-backed loan losses in a decade.
The surge can be traced to an abrupt policy reversal in October 2022, when the Department of Veterans Affairs closed a pandemic-era forbearance option that had allowed missed mortgage payments to be deferred. Many struggling veterans who had used that relief were suddenly told they must either repay a year of missed payments in a lump sum or refinance at current, much higher interest rates — a burden few could absorb. An NPR investigation in late 2023 identified tens of thousands trapped by that change; the VA then paused foreclosures for a year while it worked on a solution.
The agency’s response was the VA Servicing Purchase program (VASP), intended to convert delinquent VA borrowers into new, affordable mortgages. By early 2025, VASP had already transitioned more than 33,000 veterans into low-rate loans — roughly 2.5 percent interest on average — and industry groups and advocates said it was preventing foreclosures and keeping veterans housed.
But on May 1, 2025, the new administration ended VASP unexpectedly, citing cost concerns, and gave servicers and VA staff about a week’s notice. Borrowers already enrolled were allowed to keep their new loans, but no new veterans could enter the program. Mortgage industry warnings that ending VASP without a replacement would spark widespread foreclosures proved prescient. “Foreclosure. Period. That’s really where it’s gonna come to,” Elizabeth Balce of the Mortgage Bankers Association told a House hearing in March 2025.
Since VASP’s closure, many servicers have funneled veterans into loan modifications that often increase interest rates and monthly payments — sometimes dramatically — because VA borrowers no longer have the same non-price alternatives available to homeowners in other federal mortgage programs. With mortgage rates having climbed from roughly 3 percent to as high as 7 percent over the past year, a modification at today’s rates can add hundreds of dollars to a monthly bill. NPR documented cases including:
– Jon Henry, an Army veteran in Kansas City, whose modified loan raised his monthly payment by about $380.
– Shante and Mark Benfatto, whose modification increased their payment by about $300 a month, plus roughly $105 in late fees; Shante is 100% disabled.
– Jerome Thomas, an Air Force veteran in Florida, whose payment rose by about $800 and whose rate jumped to 6.8 percent; he says he was told to accept the change or face foreclosure.
Data from mortgage-industry trackers indicate that at least some of the veterans who were foreclosed after VASP ended would likely have qualified for the program and could have stayed in their homes had it remained available. ICE Mortgage Technology’s records show a clear spike in VA loan foreclosures after the program was shut down.
The VA says it is developing a follow-up program that would allow missed payments to be tacked onto the end of a loan — preserving the original mortgage terms and interest rate — which would help borrowers who secured historically low rates. But the agency’s draft plan includes a significant caveat: if a higher-rate modification raises a veteran’s monthly payment by up to 15 percent, servicers would be required to place the borrower into that costlier modification instead of offering the deferred-payment option. Under that structure, a borrower with a $2,000 payment could be put into a modification that adds up to $300 per month without being offered the option to defer missed payments.
The Mortgage Bankers Association and housing advocates warn that the proposed “waterfall” of options would still leave veterans worse off than similarly situated non-veterans, and that payment-increasing modifications should be a last resort because they heighten the risk of redefault. Pete Mills of the MBA urged the VA to reorder the hierarchy of options so increases in monthly payments are used only after other alternatives.
Advocates are pressing servicers to pause foreclosures until the VA’s new program is up and running — a process VA officials say will take months — to avoid more 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 impact is stark. Leann Ledford and her husband in Spokane, Washington, bought a home with a VA loan in January 2021 after severe hardship: her husband, a Marine wounded in Afghanistan, was unable to work while disability paperwork moved through the VA; the family spent months living in a trailer. After costly home repairs in 2022 left them behind, their lender placed them into forbearance based on prior VA guidance that payments could be deferred. Following the VA’s 2022 policy change, they were told to repay missed payments they couldn’t afford. Although they applied for VA loss mitigation, they were not permitted to resume regular mortgage payments and became caught in a process that stretched on for years.
VASP might have helped, but the program was closed before they were enrolled. Their home was sold at a foreclosure sale and is now owned by the VA; the family was offered $3,500 “cash for keys” and told to leave. Ledford says she learned of the foreclosure only when someone knocked on their door. The loss has destabilized the family and worsened her husband’s health; he has begun having seizures again. The VA said it “worked tirelessly with the Ledford family” and noted that federal rules generally assume veterans must be able to make mortgage payments; the agency also said it remains ready to assist the family with health care services.
VA officials did not respond to detailed questions about why the agency ended VASP without an immediate replacement or whether any measures could now prevent families like the Ledfords from losing their homes. Housing groups warn that without a prompt foreclosure pause and a new program that prioritizes preserving payments rather than shifting veterans into higher monthly bills, thousands more veterans could 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 crafting a remedy. VASP’s quick expansion in early 2025 demonstrated the approach could work at scale; its sudden closure and the gap before a replacement have accelerated foreclosures and left many veterans in harsher positions than other homeowners when they fall behind.