VA News: Foreclosure Halt Extended through End of Year

Written by: Heather Papows, Senior Loan Servicing & Secondary Market Consultant

Why This Matters: Servicers of VA backed loans are required to implement the new VASP program by October 1, 2024 and are now urged to extend the pause on foreclosure through December 31, 2024.

This week, the Department of Veterans Affairs issued guidance to servicers urging them to continue the pause on foreclosures for VA-guaranteed loans through the end of 2024; this coming out just 2 days before the expiration of the current moratorium.

The VA stresses that this extension will allow servicers additional time to adopt the new VASP (Veterans Affairs Servicing Purchase) program, which goes live May 31. Under VASP, servicers have the ability to submit qualified VA loans for placement into a VA-owned portfolio where the loans will be modified to a fixed 2.5% interest rate, offering greater payment affordability for home retention. Servicers are required to fully implement the VASP program into their loss mitigation workout process by October 1, 2024.

The VASP program rollout announcement and other significant changes to the loan modification process for managing loans in default was released by the VA on April 17, 2024; find more details on this release outlined in our last VA servicing blog post found here.

In 2023 alone, the “VA helped more than 145,000 Veterans and their families avoid foreclosure”. [1] This staggering fact paints an optimistic picture for Veterans and their families on the possibility of maintaining homeownership even through unforeseen financial difficulties but doesn’t eliminate the challenges the servicers of these loans continue to face.

If you are a servicer of VA-backed loans struggling to manage loss mitigation procedures or the ability to offer feasible workout options, reach out to us at Spillane Consulting Associates. With 33 years of industry experience and a team backed with a wealth of knowledge, you’re sure to find a partner offering real-world solutions and guidance that sets you and your customers up for success. Contact our Director, Bill Dolan, at WDolan@scapartnering.com or by phone at (617) 694-2617 to chat with us today.

[1] VA calls for extension of Veteran foreclosure moratorium through Dec. 31, 2024