Advocates Praise Program and Call for Foreclosure Pause Until It is Fully Implemented
WASHINGTON – Today, the U.S. Department of Veterans Affairs released its VA Servicing Purchase (VASP) program to help VA borrowers facing financial hardships avoid unnecessary foreclosures. Through VASP, the agency will modify and purchase qualifying loans in default to provide meaningful payment assistance to VA borrowers in financial distress. Consumer advocates at the National Consumer Law Center (NCLC) and the Center for Responsible Lending (CRL) expressed support for the new program and urged the VA to extend the foreclosure pause, currently set to expire on May 31, 2024, until the program is widely available to eligible VA borrowers in need.
“The VASP program is badly needed as Veteran borrowers have had no meaningful alternatives to foreclosure for over a year,” said Steve Sharpe, senior attorney at the National Consumer Law Center. “The VA must extend the foreclosure pause until VASP is implemented so that all eligible borrowers have fair access to the new program. We also urge VA to eliminate any rules that unnecessarily limit access to VASP for borrowers who previously received unaffordable loan modifications.”
“The VA has designed a program that will be broadly available and provide relief that many VA borrowers need, especially in the current high interest rate environment,” said Kanav Bhagat, consultant to the Center for Responsible Lending. “We believe the program will provide tens of thousands of active-duty servicemembers and Veterans with the assistance they have earned through their service, allow them to remain in their homes, and avoid foreclosures.”
NCLC and CRL provided comments to the VA urging expansion of home retention alternatives for borrowers with VA-guaranteed loans who are facing financial difficulties. The comments explained that the VA’s current system fails to provide relief and will unnecessarily cause some active-duty servicemembers and Veterans to lose their homes. The comments also urged the VA to avoid placing unneeded and burdensome procedural barriers on borrowers trying to access the relief. The VASP program released today largely addresses these concerns and gives borrowers access to streamlined assistance.
In addition to calling for an extension to the foreclosure moratorium, the consumer advocates also recommend additional program changes that the VA can implement to further improve VASP, including a system for modifying interest rates that gives all borrowers substantial payment reductions and a plan for limiting servicing transfers.
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Press Contacts
- Center for Responsible Lending: Matthew Kravitz, matthew.kravitz@responsiblelending.org
- National Consumer Law Center: Stephen Rouzer, srouzer@nclc.org
Since 1969, the nonprofit National Consumer Law Center® (NCLC®) has worked for consumer justice and economic security for low-income and other disadvantaged people in the U.S. through its expertise in policy analysis and advocacy, publications, litigation, expert witness services, and training.
The Center for Responsible Lending (CRL) is a non-partisan, nonprofit research and policy advocacy organization working to promote financial fairness and economic opportunity for all, end predatory lending, and close the racial wealth gaps.