Veteran’s Association Servicing Purchase (“VASP”)
Help is on the way for Veterans who have defaulted in paying their VA Home Loan. On April 10, 2024, the Department of Veterans Affairs announced that it will launch a new program called the Veterans Affairs Servicing Purchase (“VASP”) program. VASP was designed to help Veterans experiencing severe financial hardship avoid foreclosure.
Per the VA’s press release, VASP was to be implemented on May 31, 2024, however, the roll out was delayed. As a result, there is currently a moratorium on VA loan foreclosures. This moratorium runs through December 31, 2024, and was put in place so Veterans do not miss the opportunity to apply for VASP. According to the VA press release VASP will help approximately 40,000 Veterans avoid foreclosure and stay in their homes.
Prior to VASP, the available VA loan modification options had rigid requirements such as a 10% reduction in the monthly payment. This made modifying loans nearly impossible, as capitalizing arrears on the existing principal balance, raised the balance of the loan, equating to a higher payment. This coupled with a period of high interest rates made these programs ineffective as a whole. While the VA Traditional Loan Modification, the VA 30 Year Loan Modification, and the VA 40 Year Loan Modification still exist, VASP offers Veterans a fourth modification option with much better terms and relaxed requirements.
Specifically, VASP will require loan servicers to identify eligible loans, modify them to a 2.5% rate and extend the loan term to 30- to- 40-years, and then sell the loan to the VA. Considering market rates are around 6.5%, the VASP rate of 2.5% will significantly lower loan payments to the delight of many Veterans facing financial hardships. A trial payment plan of three months is required if the loan is 24 – 60 months delinquent. It is important to point out that the VA uses a waterfall approach when reviewing for loan modifications. This means that a borrower must first be reviewed for a VA Traditional Modification, then a VA 30 Year Loan Modification, and then the VA 40 Year Loan Modification. If the borrower does not qualify for any of those three modifications, then a VASP review will be completed.
Even though implementation of VASP has been delayed it remains a beacon of hope for many Veterans who may have fallen on challenging times and want to retain their home. More details on VASP will be forthcoming. If you have a VA loan and are facing a default in paying your mortgage it is important that you contact an experienced attorney, who understands the intricacies of the law to obtain you a favourable result. At J. P. Robinson Law we offer free initial consultations and will work with you to provide zealous and knowledgeable representation. Here we are dedicated to taking the time to answer your questions and ensure you understand the process and your legal options. To get started please call J. P. Robinson Law at (914) 265-3179 or email at Justin@jprobinsonlawllc.com
Stay tuned for more VASP updates.
April 10, 2024 - VASP Press Release: New VA program helps 40K-plus Veterans stay in their homes
