VA ends loan program, leaving 15,000 veterans with higher payments

VA’s replacement took 13 months to launch; most lenders still lack it

The Trump administration’s decision to end a low-interest Veterans Affairs loan program has left thousands of veterans with sharply higher mortgage costs, an NPR investigation has found. Among veterans who had their loans modified after a financial hardship, more than 15,000 saw their monthly payments increase by at least $150, and more than 700 saw increases of $1,000 or more, according to the investigation, which obtained previously unreported data from the Department of Veterans Affairs.

Lenders offer loan modifications to help homeowners catch up on missed payments by changing the loan terms. Mortgage companies don’t want to foreclose, because both they and the homeowner experience losses, and they have levers they can pull to help people who have fallen behind on payments. For the vast majority of Americans, a modification either lowers the payment or keeps it the same, depending on what they can afford. That has not been the case for VA loans: NPR found that 63% of veterans who received a loan modification were hit with a payment increase, compared with just 2% for modifications of loans guaranteed by the government-sponsored enterprises Fannie Mae and Freddie Mac, which cover most of the U.S. mortgage market.

The increases trace to the end of the Veterans Affairs Servicing Purchase program, known as VASP, which the Biden administration created after earlier problems in its VA home loan program, NPR has reported. VASP helped tens of thousands of veterans who had fallen behind on their payments by rolling missed payments into a new mortgage at a low 2.5% interest rate. The Trump administration ended the program on May 1, 2025 — administratively, with no vote from Congress, and apparently in coordination with House Republicans, who announced the move before the Department of Veterans Affairs did.

Key Republicans on the House Veterans’ Affairs Committee had vocally opposed VASP, warning that it put taxpayers on the hook for thousands of loans to veterans who had trouble paying. “If the Biden version of VASP was allowed to continue, I fear that the home loan will not exist in the future for my fellow veterans,” Wisconsin Rep. Derrick Van Orden, a committee member who led the call to wind down the program, said at a March 11, 2025, hearing. After the shutdown, Van Orden and committee Chairman Mike Bost of Illinois said in a joint press release: “We — along with many of our colleagues — had serious concerns about the impact VASP would have on not only the future of VA’s home loan program, but the mortgage lending business as a whole. Today, the Trump administration rightfully put an end to VA’s VASP program.” Bost and Van Orden did not respond to NPR’s repeated requests for comment.

But at the same hearing, as well as in letters to Congress and press releases, the mortgage industry and housing groups explicitly warned the Trump administration not to end VASP without first creating another viable option for veterans. If the VA shut down the program before standing up a replacement, they said, veterans would be left with far worse options than other American homeowners. With interest rates up around 7%, they warned that the only option left would be a modified loan at current higher rates, which would result in foreclosures for those who could not afford the higher payments — and that is what has happened, the investigation found. The 10-year Treasury yield, a benchmark that helps set mortgage rates, stood at 5.05% as of Oct. 30, according to Federal Reserve Economic Data. “This was a foreseeable outcome of abruptly ending a program without a replacement in place,” said Matthew Douglas of the Housing Policy Council, who represents the largest U.S. mortgage companies and was among those warning the VA not to kill VASP. Asked about NPR’s findings, he said: “It’s a mathematical certainty that borrowers are going to have those kind of shocking payment increases.”

Scott Boyd, who lives outside Columbus, Ohio, is among the veterans paying the higher costs. After his father died of cancer when Boyd was a teenager, he said, he saw the military as a clear path to start helping his family. “My mom signed paperwork when I was 16,” Boyd recalled. “I’m like, ‘I’m sending my checks home to take care of my mom.’” He started out in the infantry and saw combat, later working in Army intelligence in dangerous places. When he got out in 2002, he had skills that set him up for a career in tech. Like other buyers at the time, he got a low interest rate when he bought a house near Columbus in 2021 using a VA home loan. “I felt very blessed,” he said.

A few years later, Boyd hit a crisis. He lost his job in a mass layoff, and he said his time in combat came back to haunt him in the form of PTSD. He checked himself into the Dayton VA hospital for treatment but fell behind on his mortgage. His lender told him not to worry because the VA had a loan forbearance program that would let him pause his payments and provide an affordable way to catch up afterward. “I later found out that wasn’t true,” he said — the Trump administration had shut down VASP. Boyd said his mortgage company had been telling him that he, too, could use VASP when he was able to resume paying his mortgage; he would constantly ask them, “OK, this is getting further and further behind,” and the lender replied, “You have this last lever to pull.” The exchange came in the spring of 2025, just months into the second Trump administration.

With no other option, Boyd accepted a modified home loan at today’s higher interest rates. “I was doing the math in my head as they were telling me, you know?” he said. “If I’m going from 2.75 to 6.75 … it seemed ridiculous.” His rate rose from 2.75% to 6.75%, his loan term was extended to 40 years, and his monthly payment increased by $1,181. He went from about half of his payment going toward principal to more than 90% going to cover interest. “This is outrageous,” Boyd said. “I remember just thinking to myself, ‘This is just so broken.’” He’d just gotten back on his feet financially, and his options were the loan modification or foreclosure, with four kids in the house and his father-in-law receiving home hospice care in the finished basement. “My job was still new, and that still felt shaky. … My PTSD was shaky. … It seemed like the right thing to do was just to take the modification,” he said.

After NPR shared its findings, California Democratic Rep. Mark Takano, the ranking member of the House Veterans’ Affairs Committee, said: “This is the height of insanity.” “These are veterans that are already financially distressed — they were already in trouble,” he said. Of Boyd’s case, Takano said: “The VA home loan program should not be making things worse and more stressful for that veteran, a combat veteran, who’s been through hell.”

At the same time Van Orden was calling for the program to be ended, he had written a bill to replace it with a new VA Partial Claim Program (PCP). Congress quickly passed the bill with broad bipartisan support, directing the VA to create an option that lets veterans move missed payments to the back of their loan term, keeping their original mortgage and interest rate.

But the VA took more than 13 months to design and announce the program’s details, which it did in June of this year, and the mortgage industry was given another 180 days to implement it. Most mortgage companies still do not offer the PCP; it took two more months after the launch before the first mortgage company offered veterans access. The VA has set a Nov. 28 deadline for the industry to stand the program up. In the gap between the two programs, thousands of veterans got modified loans with higher interest rates and payments. Boyd signed his loan modification two weeks before the VA launched the PCP — a program that would have allowed him to keep his original loan terms with the same monthly payment and low 2.75% interest rate but, as designed, does nothing for veterans already stuck in modified loans.

Industry groups say raising a struggling homeowner’s payment makes it more likely the borrower will redefault and face foreclosure. Foreclosures on VA loans rose to a 10-year high after the program ended, according to industry data, and experts warned at a congressional roundtable in September that time is running out for the government to help these veterans, or a wave of foreclosures is still to come. Takano said the VA could, if it chose, put affected veterans back into lower-cost mortgages, or Congress could pass a law to do so. “We could do something for those veterans who saw a jump in their interest rates,” he said.

VA press secretary Quinn Slaven said in a statement that the VA helps thousands of veterans “retain homeownership and/or avoid foreclosure through programs like payment forbearance, loan modifications and individualized repayment plans.” Slaven also wrote that “many leading voices in Congress supported the termination of VASP, which put the entire VA home loan program at risk.” Asked about veterans who fell into the gap between the two programs, Slaven said the VA home loan program “is based on the premise that while Veterans may need some assistance, they must generally be able to make their mortgage payments.”

Outside Columbus, Boyd is still managing to make the higher payments. He bought the home, he said, as a guarantee of shelter and stability for himself, his partner and the four kids they are raising together. “I made a commitment, saying no matter what, I want to build a home that is big enough. … I wanted to get them in better schools and things like that,” he said. He said he does not often talk about his service and does not feel entitled to be treated better than any other American, but he did not expect the VA to give him worse options than people who never served. “I really felt hurt more than anything. I wasn’t angry. I was just like, I felt so defeated,” he said. “Everything that I’ve done for this country and the things that I’ve been through, the things that I’ve seen, the things I’ve had to deal with … it’s come down to, ‘Yeah, I’m sorry — it’s not in our systems yet. … There’s nothing we can do about it.’”