Senator Hirono, a member of the Veterans Affairs Committee, declined to comment to the Old North News on the VA Home Loan Reform Act. The National Defense Committee chair has warned that this act could threaten housing for thousands of veterans.
According to Mortgage Technology, by the end of March 2025, serious delinquencies on VA-backed mortgages—defined as loans at least 90 days past due—had surged by 14% compared to the same time last year. This increase contributed approximately 60,000 loans to the seriously delinquent portfolio. The rise occurred amid the winding down of emergency protections, including the expiration of the VA Servicing Purchase (VASP) program. Concurrently, foreclosure inventories and completed foreclosure sales also increased as the VA lifted its voluntary moratorium that had temporarily shielded many struggling borrowers from displacement.
In the first quarter of 2025, the VA mortgage delinquency rate fell slightly to 4.63%. However, this improvement masked a more troubling trend: the share of VA loans in active foreclosure climbed to 0.84%. This figure represents the highest foreclosure rate for VA loans since 2019 and marks the largest quarter-over-quarter increase in foreclosure starts since tracking began in 1979 by the Mortgage Bankers Association. Experts say this reflects both the termination of pandemic-era support programs and a lack of long-term alternatives for veterans behind on payments, according to National Mortgage Professional.
The Mortgage Bankers Association found that housing market analysts have warned about a steep rise in VA loan delinquencies and foreclosure starts directly linked to the expiration of key safety net programs. The VASP initiative, which had previously allowed the VA to purchase defaulted loans and offer low interest rates, stopped accepting new applications in May 2025. The VA’s foreclosure moratorium ended shortly afterward. Without a successor program in place, servicers now report increasing difficulty in assisting veterans, leaving thousands vulnerable to foreclosure without a clear path to recovery.
As per the U.S. Department of Veterans Affairs, the conclusion of the Veterans Affairs Servicing Purchase (VASP) program on May 1, 2025, has created uncertainty for thousands of veterans struggling to stay in their homes. The VASP program had been instrumental in helping borrowers avoid foreclosure by allowing the VA to purchase delinquent loans and offer fixed-rate modifications, often at just 2.5%. Its abrupt end left a gap in relief options just as many pandemic-era protections expired, increasing the number of borrowers at imminent risk of losing their homes.
Over 17,000 veterans were able to avoid foreclosure thanks to the VASP program. However, an estimated 58,000 additional borrowers who were eligible but hadn’t yet applied were left unprotected after the program ended. With no immediate successor plan in place, those veterans now face sharply limited options for staying in their homes if they fall behind on payments, Market Watch reports.
