VA Extends Foreclosure Moratorium for Veterans, Introduces New Initiative to Prevent Home Loss

Veterans at risk of losing their homes to foreclosure have been granted additional time to resolve their situations.

The Department of Veterans Affairs (VA) is extending the foreclosure moratorium until December 31 of this year for veterans with certain VA-backed home loans.

The foreclosure moratorium for veterans, which began during the foreclosure crisis, was originally set to end on the last day of May, but veterans now have a few more months to work with the VA to explore ways to prevent losing their homes to foreclosure.

Michael Frueh, the VA’s Principal Deputy Under Secretary for Benefits, highlights the new VA Servicing Purchase Program (VASP), but cautions that it should only be considered as a last resort.

Through VASP, the VA will purchase defaulted VA loans from mortgage servicers, modify the loans, and then add them to the VA-owned portfolio as direct loans for veterans with VA-backed loans who have exhausted all other alternatives.

“We will reduce the interest rate and extend the term of the loan,” Frueh said. “The reduced interest rate and extended term should make the loan more manageable for the borrower and, as a result, increase the likelihood that the veteran family will remain in their home and avoid foreclosure.”

Frueh encourages veterans experiencing mortgage problems to contact their mortgage servicers immediately. “Please respond to the letters because they are deeply involved in your mortgage,” he said. “Any veteran borrower with a VA loan will also be contacted by us. The VA will contact them. Feel free to contact the person listed on the letter sent to you,” he asserts. 

Currently, more than 3.7 million veterans have active home loans with the VA, but it also indicates that the VASP program could assist over 40,000 veterans.

By Elias DaSilva | October 3, 2024.