Trump's VA killed a home loan program. Thousands of veterans are paying the price

The Numbers Behind the VA Loan Freeze

Thousands of military veterans across the United States carrying VA-backed mortgages have faced surging interest rates and monthly payments since last year. This wave of financial distress arrived after the Trump administration abruptly shut down a low-interest federal relief program designed to keep struggling former service members in their homes, an investigation by NPR revealed.

Among veterans who secured loan modifications following a financial hardship, more than 15,000 watched their monthly bills climb by at least $150. More troubling still, over 700 veterans absorbed payment increases of $1,000 or more every single month. When homeowners fall behind, lenders typically offer loan modifications to bridge the gap. For the broader U.S. mortgage market, modifications either lower monthly payments or keep them steady. Government-sponsored enterprises like Fannie Mae and Freddie Mac record modification payment increases for only about 2% of borrowers. By stark contrast, NPR found that 63% of veterans who received a VA loan modification were hit with a payment increase.

This is the height of insanity, said California Democratic Rep. Mark Takano, the ranking member of the House Veterans’ Affairs Committee, after reviewing the findings. These are veterans that are already financially distressed — they were already in trouble.

How Scott Boyd Lost His Safety Net Near Columbus

Army veteran Scott Boyd stands inside his home near Columbus, Ohio, alongside his dog, Jessi. Having served in military intelligence and combat infantry before leaving active duty in 2002, Boyd transitioned into a technology career. In 2021, he purchased his home using a VA home loan, securing a favorable low-interest rate. Then, a mass layoff stripped him of his income, and the lingering weight of combat-related PTSD sent him to the Dayton VA hospital for treatment. He fell behind on his mortgage.

Mortgage servicers typically rely on federal tools to prevent foreclosures. Boyd’s lender assured him that the Department of Veterans Affairs maintained a forbearance program to pause payments and establish an affordable path forward. That assurance collapsed when the Trump administration dismantled a vital component of the VA home loan infrastructure known as the Veterans Affairs Servicing Purchase (VASP) program. Without VASP, Boyd and thousands of others were left with a single, high-cost alternative: a modified loan tethered to modern, elevated interest rates. For Boyd, that translated into an extra $1,181 due every month.

This is outrageous, Boyd said. I remember just thinking to myself, ‘This is just so broken.’

The Policy Clash on Capitol Hill

In the spring of 2025, during the opening months of the second Trump administration, Republican lawmakers on the House Veterans’ Affairs Committee vocally targeted the initiative.

During a House Veterans’ Affairs Committee hearing on March 11, 2025, Wisconsin Republican Rep. Derrick Van Orden defended the wind-down. 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, Van Orden warned during the proceedings.

This was a foreseeable outcome of abruptly ending a program without a replacement in place. It’s a mathematical certainty that borrowers are going to have those kind of shocking payment increases.
Matthew Douglas, Housing Policy Council

The Long Gap Before the Partial Claim Program

While dismantling VASP, lawmakers advanced a legislative alternative titled the VA Partial Claim Program (PCP). Congress passed the measure with bipartisan support, directing the VA to allow struggling veterans to shift missed payments to the back of their loan terms so they could retain their original mortgages. The VA took more than 13 months to publish the details of the new program in June, and lenders were granted another 180 days to implement it.

Industry data indicates that foreclosures on VA loans climbed to a 10-year high following the termination of VASP.

Meanwhile, Illinois Republican Rep. Mike Bost, chairman of the House Veterans’ Affairs Committee, and Rep. Van Orden did not respond to repeated requests for comment from NPR. VA press secretary Quinn Slaven defended the administration’s actions in a written statement, noting that the agency helps thousands of veterans retain homeownership through existing channels while maintaining that borrowers must generally be capable of servicing their debts.

What Lies Ahead for Trapped Homeowners

Outside Columbus, Scott Boyd continues meeting his mortgage payments while living with children and his dying father-in-law. Just two weeks after Boyd signed his high-cost loan modification agreement, the VA officially launched the Partial Claim Program that would have preserved his original, affordable terms.