A rule establishing permanent foreclosure protection measures for Department of Veteran Affairs borrowers was signed into law by President Donald Trump Wednesday, after a previous iteration of a federal servicing program expired earlier this year.
The VA Home Loan Program Reform Act, which was introduced by Rep. Derrick Van Orden R-Wis., aligns servicing guidelines with those offered by the Federal Housing Administration.
The partial claim program will allow delinquent veteran borrowers to put past due balances at the end of their loan. The amount of a partial claim would not exceed 25% per terms of the bill, or 30% if a missed payment occurred during a five-year period between 2020 and 2025. When the VA loan pays off, the borrower will repay the deferred amount to the department at 0% interest.
President Trump called the bill "common sense legislation" during the bill's signing Wednesday.
"Thanks to this bill, the Department of Veteran Affairs will be empowered to pay loan holders the necessary amount to prevent foreclosures on our veterans, so our veterans won't be foreclosed and put out onto the streets," Trump said. "It's very important."
"This bill provides desperately needed relief to veterans and their families who have fallen behind on their mortgages of which there are a lot because we have somebody that doesn't want to lower interest rates," the president said, taking a
Estimates show that close to 75,000 veteran borrowers had missed three or more payments on their VA-guaranteed mortgage as of April.
Stakeholders react to singing of bill
Industry participants applauded the passage of the bill, but highlighted that more must be done to protect veterans from foreclosure.
The National Consumer Law Center said the bill being signed into law "is an important first step toward giving veterans the help they need."
"The VA now must streamline the new program to promote broad and timely access," said Steve Sharpe, senior attorney at the NCLC, in a statement. "We also call on Congress to work on further improvements to VA's foreclosure prevention toolbox."
The NCLC highlighted that in addition, Congress must develop an option for borrowers who need monthly payment relief when they fall behind on mortgage payments.Mike Calhoun, president of the Center for Responsible Lending, said the partial claim bill provides meaningful payment assistance to veterans in financial distress, but stressed the importance of additional tools to help VA borrowers.
"We encourage Congress to give VA additional financial hardship tools offered by other federally backed mortgage programs to help Veterans avoid unnecessary foreclosures and remain in their homes," Calhoun said in a statement.
The partial claim program replaces the Department of Veterans Affairs' Servicing Purchase Program, or VASP, which was
VASP, introduced during the Biden administration as a temporary, last-resort tool for veteran homeowners, was criticized by some lawmakers who characterized it as fiscally irresponsible. It helped keep 40,000 borrowers from losing their homes, according to NCLC.
