Most Americans want to help veterans and their families who fall on hard economic times. Republicans say a bill that just passed the House does it the right way, cleaning up a mess left by the Biden administration.
“The Biden administration was dead wrong to risk the future of VA’s Home Loan program by creating the VASP program, and the Trump administration was right to put an end to it,” said Veterans’ Affairs Committee Chairman Mike Bost (R-Ill.).
Bost was referring to the recently passed VA Home Loan Program Reform Act. It addresses problems created by the Veterans Affairs Servicing Purchase (VASP) program.
The Biden administration launched VASP in May 2024 as a “last-resort” tool within the VA’s suite of home retention options. Under VASP, the VA purchased defaulted VA-guaranteed loans from mortgage servicers, modified the loan terms (often to a fixed 2.5 percent interest rate), and held the loans in its own portfolio as direct loans.
It’s that last detail — making the taxpayer-funded VA a mortgage holder — that created the problem, critics say.
The VA ended VASP on May 1, 2025, arguing the agency is not structured to serve as a mortgage loan restructuring service and lacked congressional authority, as it was created under the Biden administration. The program’s scale, with over 17,000 loans purchased, far exceeded its original intent for fewer than 100 cases.
The Biden administration projected VASP would save $1.5 billion in federal spending from 2024 to 2033. Instead, the department spent $5.5 billion helping just over 17,000 veterans.
Economists say the Biden-era program had all the wrong incentives.
“Veterans with 6 percent or 7 percent mortgages have a strong incentive to stop paying, just to qualify for a government refinance at 2.5 percent,” Tobias Peter, co-director of the Housing Center at the American Enterprise Institute, wrote in The Hill.
The new Home Loan Program Reform Act provides help for veterans who truly need it, while protecting the interests of taxpayers, supporters say.
“The VA Home Loan Program Reform Act is not just a fix, it’s a necessary court correction,” said Rep. Derrick Van Orden (R-Wis.) “This program has worked in the past, keeps vets and their families in their homes, and does so at a fraction of the cost of the horrific VASP program.
Veterans like retired U.S. Army Major General James “Spider” Marks acknowledged the VASP program had flaws, but they opposed suggestions the VA should abandon mortgage support entirely. Doing so “places the risk exclusively in the hands of the veteran, not the department responsible for identifying and mitigating risk,” Marks wrote in the Military Times.
When Republicans began targeting VASP, proponents urged that a partial claim program be reinstated.
“Congress quickly enacting a partial claim program would benefit veteran homeowners and the VA as well, since avoidable foreclosures on federally-backed loans result in unnecessary government losses,” said Mike Calhoun, president of the Center for Responsible Lending.
The new VA Home Loan Program Reform Act does just that. The challenge now is to get this reform bill through the U.S. Senate.
That bill is likely to receive Democratic support. U.S. Sens. Richard Blumenthal (D-Conn.) and Lisa Blunt Rochester (D-Del.) introduced a similar proposal in April.
The House-passed bill also received support from mortgage groups, who called it necessary.
“Those who have served our country deserve access to the same protections available to other homeowners, and the passage of the VA Home Loan Program Reform Act of 2025 out of the House is a critical step toward that goal,” Rocket Mortgage said in a statement. “This legislation will enable the VA to develop a strong, sustainable solution that provides mortgage servicers with the tools they need to support Veterans in today’s higher-rate environment.”
