The VA has its fix for a home loan debacle, but many vets who got hurt won't get help

The Department of Veterans Affairs announced a long-awaited new program on Wednesday to help thousands of veterans who were left on the verge of losing their homes after a pandemic aid effort went awry.

But it appears that many who were harmed financially won't qualify to get this new help.

"The purpose of this program is to assist the more than 40,000 veterans who are at the highest risk of foreclosure," Josh Jacobs, VA undersecretary for benefits, said at a media roundtable introducing the Veterans Affairs Servicing Purchase program, or "VASP."

What senior VA officials failed to say on their call with reporters is that the VA put veterans in that tough spot in the first place. In 2022, the VA abruptly ended part of its COVID mortgage forbearance program while tens of thousands of vets were still in the middle of it — trapping them with no affordable way to get current on their loans.

VASP is supposed to fix that problem, by allowing the VA to offer these homeowners loan modifications with interest rates that are well below the market rates on regular mortgages. The VA will own mortgages itself and will offer vets who qualify a modified home loan with a 2.5% interest rate.

But not everybody who got hurt is going to qualify. Most vets who have already ended up in much more costly modified loans won't get the help.

The VA forbearance fiasco

In November, the VA halted foreclosures for all homeowners with loans backed by the VA after an NPR investigation revealed that the agency had left thousands of vets facing foreclosure through no fault of their own.

COVID mortgage forbearance programs were set up by Congress during the pandemic to help people with federally backed loans by giving them an affordable way to skip