By Brian Todd

(CNN) — Affordable housing advocates and congressional Democrats are warning that more foreclosures may occur as the Department of Veterans Affairs phases out a mortgage rescue program for financially strapped veterans this week.

Beginning Thursday, the VA will no longer accept enrollees to the Veterans Affairs Servicing Purchase Program, or VASP, a program established last year during the Biden administration that helps veterans who are in trouble with their mortgages.

“We are very worried,” Justin Wiseman, vice president for residential policy at the Mortgage Bankers Association, a nonpartisan group representing the interests of mortgage companies, told CNN.

“We don’t like to foreclose on anyone, and especially not on veterans,” Wiseman said. “We’re very worried that without a replacement program for VASP, there will be more foreclosures.”

The Center for Responsible Lending (CRL), a nonpartisan, nonprofit research and policy organization that also advocates for fair housing, is sounding a similar alarm, noting in a recent letter to to Congress that tens of thousands of veterans are at risk. CRL wrote that once VASP phases out, if there is not a replacement program or another option, “VA borrowers will face unnecessary foreclosures.”

“To be clear, this is not a theoretical exercise,” CRL continued. “As of February 2025, there were about 81,000 active-duty servicemembers or Veterans who had already missed 3 or more payments on their VA mortgages and were in default. Without VASP or immediate access to alternative policy tools that provide relief … many of these homeowners will be forced to sell their homes and move or face foreclosure.”

The VA has defended the move, stressing that current enrollees will not be impacted and highlighting other programs it offers to help veterans secure home loans.

While the VA has not announced a program to replace VASP, Republicans in Congress have introduced legislation that would create an alternative program that would allow struggling borrowers to still receive federal assistance.

Republicans offer alternative

The VASP program was announced in May 2024. It purchases financially troubled veterans’ loans from outside mortgage companies and modifies those loans, including reducing the interest rates in order to help struggling veterans avoid foreclosure and eviction. In less than a year since VASP has been active, the VA says it has purchased more than 17,000 loans, worth more than $5.48 billion.

In 2022, the VA ended a similar program for rescuing veterans’ mortgages placed at risk by the Covid-19 pandemic, which prompted the agency to launch VASP.

The phasing-out of VASP comes as the VA undergoes a massive reduction in force, which VA Secretary Doug Collins has said is targeting roughly 70,000 agency employees for termination.

In a statement to CNN regarding the ending of the VASP program, the VA said, “This change is necessary because VA is not set up or intended to be a mortgage loan restructuring service.”

Some Republican lawmakers are applauding the conclusion of the program, which they have criticized as reducing interest rates for struggling veterans at the expense of taxpayers, and proposing the creation of an alternative program.

Illinois Rep. Mike Bost and Wisconsin Rep. Derrick Van Orden are pushing for the establishment of what’s known as a partial claims program at the VA, which would offer struggling home-owners an interest-free loan to cover their unpaid payments before adding the cost to the end of their mortgage.

“We had serious concerns about the impact VASP would have on not only the future of VA’s home loan program, but the mortgage lending business as a whole,” Bost, who chairs the House Veterans Affairs Committee, and Van Orden, who oversees the Subcommittee on Economic Opportunity, said in a statement to CNN.

“The Trump administration rightfully put an end to VA’s VASP program,” they said. “This action underscores House Republicans’ intent to establish a partial claims program at VA to ensure veterans can stay in their homes if they’re in financial hardship while still protecting the American taxpayer.”

‘Cruel’ and ‘wrong’

Democrats on Capitol Hill are dismayed, saying veterans should have a viable alternative before the VA ends the program. “VA is taking a misstep that will push thousands of veterans into foreclosure,” several Democrats, led by ranking member of the Senate Veteran Affairs Committee Richard Blumenthal, said in a recent letter to Collins.

“This is cruel, wrong, and runs counter to the benefits earned by veterans,” they said.

On Wedn?esday, Blumenthal and Democratic Sen. Lisa Blunt Rochester of Delaware announced their own plans to introduce legislation that would replace VASP with a partial claims program.

The VA stresses current enrollees will not be impacted and says there are other programs available to veterans.

In an email to CNN, VA press secretary Peter Kasperowicz said the phase out “will not affect any of the program’s existing participants, nor will it impact any eligible Veterans who complete their VASP enrollment prior to May 1, 2025.”

Kasperowicz said the VA continues to offer “an array of housing assistance options designed to help Veterans,” and referred CNN to a variety of VA programs to help veterans get home loans.

Meanwhile, Veterans of Foreign Wars, a nonprofit organization supporting veterans, has been telling its members to take action ahead of the phase out.

“As soon as we received the information from VA last week about VASP, we informed our members and audiences through our online platforms and encouraged those facing foreclosure to speak to their lenders before the deadline,” Rob Couture, director of public affairs for the VFW Washington Office, told CNN in a statement.

This story has been updated with additional details.

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