Foreclosures on VA-guaranteed home loans have reached their highest level in a decade, with more than 10,000 veterans losing their homes since the Department of Veterans Affairs ended its key mortgage relief program last May. An additional 90,000 veterans remain behind on payments or in the foreclosure process, according to data from ICE Mortgage Technology.

The Veterans Affairs Servicing Purchase program, or VASP, provided struggling veterans with new mortgages at a fixed 2.5% interest rate, allowing them to defer missed payments. It assisted over 33,000 veterans before its abrupt termination on May 1, 2025, with only one week's notice to servicers. The Trump administration's VA cited potential costs as the reason for the shutdown, amid earlier Republican concerns in Congress about taxpayer-funded bailouts for delinquent loans.

The issues trace back to 2022, when the Biden administration ended a pandemic-era forbearance option, leaving about 40,000 veterans facing lump-sum repayments they could not afford amid rising interest rates. The VA responded by halting foreclosures nationwide for a year and launching VASP in early 2025. However, mortgage industry groups warned Congress in March 2025 that closing VASP without a replacement would trigger mass foreclosures.

Veterans have shared stories of financial devastation. Leann Ledford of Spokane, Washington, whose Marine veteran husband suffers from PTSD and brain injuries, lost her home after missing the VASP enrollment deadline. "When you lose your home, nothing else matters," she said. The family faces eviction as early as Thursday.

Jon Henry, an Army veteran from Kansas City, Missouri, who served in Iraq, saw his monthly payments rise by $380 after a loan modification. "It's a struggle," he said. Shante Benfatto, a 100% disabled Afghanistan veteran in Clarksville, Tennessee, faced $300 higher payments plus late fees. Her husband noted they pay late because "we can't afford the extra money."

Jerome Thomas, an Air Force veteran in Port Charlotte, Florida, dealt with an $800 monthly increase and a rate doubling to 6.8%, leaving him behind again. "I got my three kids here... it's bad," he said.

VA loan technicians have helped thousands avoid foreclosure through modifications, but options often raise payments, unlike protections for non-veterans under FHA or Fannie Mae programs. VA press secretary Pete Kasperowicz emphasized that the program assumes veterans can generally make payments.

The VA is developing a new loss mitigation framework, expected in months, to defer missed payments while keeping original rates. However, a draft requires servicers to prioritize modifications increasing payments by up to 15% before deferral, drawing criticism from the Mortgage Bankers Association for risking redefaults. Industry leaders urge delaying foreclosures until implementation.