The U.S. Senate has announced the passage of H.R. 1815, the VA Home Loan Program Reform Act, a bill that establishes a permanent partial claims program within the VA Home Loan Program. Under H.R. 1815, veterans will be permitted to have the same programs non-veterans have available to them through FHA loans, allowing vets who have fallen behind on their mortgages to receive federal assistance.
H.R. 1815 authorizes the Department of Veterans Affairs (VA) to take certain actions in cases of default on home loans under the VA home loan program and establishes a partial claim program:
- The VA Home Loan Program Reform Act bill authorizes the VA to pay the holder of a loan guaranteed by the VA an amount necessary to avoid the foreclosure of the loan, provided that the holder of the loan and the veteran obligated on the loan execute documents to ensure the VA obtains a secured interest in the property covered by the loan.
- The VA must prescribe loss mitigation procedures to help prevent the foreclosure of such a home loan. The VA may not take specified administrative actions (e.g., consent to the modification of loan terms) until the sequence of mitigation options has been completed.
- The VA Home Loan Program Reform Act establishes a five-year Partial Claim Program under which the VA may make a partial claim (purchase a portion of the indebtedness) on VA loans for primary residences that are in default or at imminent risk of default. Individuals who default on loans for which the VA has made a partial claim under this program must be liable to the VA for any loss resulting from the default.
- The VA must report to Congress on its strategy to ensure that veterans who purchase homes under the VA home loan program are not at a disadvantage when attempting to secure representation by a real estate agent or broker.
“The VA Home Loan program has helped millions of veterans achieve the American Dream of owning a home. However, we know that veterans–like all Americans–can fall on hard times and may need a safety net in place to avoid foreclosure on their home. The VA Home Loan Program Reform Act addresses that need head on,” said Rep. Mike Bost, Chair of the House Committee on Veterans’ Affairs. “I want to thank my friend, fellow veteran, and our Subcommittee on Economic Opportunity Chairman, Rep. [Derrick] Van Orden, for his strong leadership on this issue on behalf of veterans and their families to modernize the VA Home Loan and create a partial claim program at VA. This is good legislation that will–without question–prevent veteran homelessness and make a real difference in veteran’s day-to-day lives. I look forward to seeing President Trump sign it into law.”
On May 1, the Veterans Affairs Servicing Purchase (VASP) program expired. VASP is a mortgage assistance option that allows a number of borrowers to obtain an affordable payment when delinquent on their mortgage. The VA Home Loan Program Reform Act replaces the VASP program as a last resort for vets facing immediate foreclosure.
On April 23, 2025, the U.S. Department of Veterans Affairs (VA) issued Circular 26-25-2, announcing the termination of VASP as of April 30, 2025 at 11:59 p.m. Effective May 1, 2025, the VA terminated VASP submissions, and the VA announced that it rescinded the prescribed steps for considering veterans for hardship assistance, removing consistency, and transparency from the process.
“MBA applauds the Senate for taking swift bipartisan action to support veterans at risk of foreclosure by passing the VA Home Loan Program Reform Act,” said Mortgage Bankers Association (MBA) President and CEO Bob Broeksmit, CMB This important legislation, which passed the House in May, is a critical step forward in ensuring that distressed veteran homeowners have access to a proven and sustainable loss mitigation solution.”
According to NPR, nearly 90,000 VA loans are seriously past due, with 33,000 of those already in the foreclosure process. The National Consumer Law Center (NCLC) reports that as of April 1, there were 75,000 veteran borrowers who had missed three or more payments on their VA-guaranteed mortgage. Among those, the VA reported that 17,000 had been accepted for VASP.
“Under the Biden administration, the VA created the VASP program without consulting Congress, costing the American taxpayers $5.8 billion and endangering the entire VA home loan guarantee program,” said Rep. Derrick Van Orden. “The time for faceless bureaucrats to run roughshod over elected officials is over. My bill offers a real solution to help every servicemember and veteran maintain the American Dream of homeownership. I am grateful to my Senate colleagues for passing this important bill, and I look forward to President Trump signing it into law.”
Click here for more on the VA Home Loan Program Reform Act.
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