WASHINGTON — More than 15,000 veterans who fell behind on VA-backed mortgages ended up with monthly payments at least $150 higher after their loans were modified, according to Department of Veterans Affairs figures that had not been made public before.
Over 700 of those borrowers are now paying $1,000 or more extra each month. Overall, 63% of veterans who received a VA loan modification saw their payment climb. For mortgages backed by Fannie Mae and Freddie Mac, which make up most of the market, only about 2% of modifications raised the payment.
The jump traces to the end of the Veterans Affairs Servicing Purchase program, known as VASP. Created under the Biden administration, it let the VA buy defaulted loans and fold missed payments into a new mortgage at a fixed 2.5% rate. Leading Republicans on the House veterans panel argued it left taxpayers exposed, and the VA stopped taking new VASP cases in May 2025.
Congress created a successor in the VA Home Loan Reform Act; President Trump signed it on July 30, 2025. Under the new Partial Claim Program, a borrower in default completes a three-month trial payment plan, the mortgage servicer brings the loan current, and the VA reimburses the servicer. That amount is owed back to the VA when the home is sold, refinanced or paid off.
Detailed rules for the program did not arrive until June of this year, more than 13 months after VASP closed, and servicers were given 180 days to put it in place. Many still do not offer it. Veterans who took higher-cost modifications during that gap are not covered by the new option.
In a written response, the department pointed to forbearance, loan modifications and individual repayment plans as tools that keep many veterans in their homes. The department reported working with servicers to help 173,000 veterans avoid foreclosure in fiscal 2025. Veterans having trouble with a servicer can reach the VA at 877-827-3702, option 6.
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