VA releases final VASP details, program set for launch May 31

Today, VA published details on the highly anticipated Veterans Affairs Servicing Purchase (VASP) Program which is now set for launch on May 31. As a reminder, VA previously published an agency information collection activity in November 2023 on this program. In the information collection,  VA stated, “VA is initiating an expanded program using existing Refund provisions. This option will assist Veterans with VA-guaranteed loans who have defaulted on their mortgage loan and are facing foreclosure. Under this program, VA will exercise its statutory option to purchase the loan from the servicer and VA will hold the loan in VA's own loan portfolio. The servicer will prepare a modification of the loan to increase affordability for the Veteran. Servicers who participate in the program are required to document their efforts to assist the Veteran through a waterfall of existing loss mitigation options and provide that documentation to VA. Information collection is necessary to ensure that Veterans and servicers comply with VA program requirements under VASP that are not already covered by existing, approved information collections for loan servicing and loan refunding.” In addition to the Press Release and Chapter 9 published today, VA published a VA Servicer Newsflash with the below information and Appendix F on VASP.​

VA VASP PRESS RELEASE

“Department of Veterans Affairs (VA) Manual 26-4 Servicer Handbook, Chapter 9, has been updated to include new information regarding the VA Servicing Purchase (VASP) program. In addition, Appendix F “Additional VA Contact Information” has been replaced with the new “VA Home Retention Waterfall.”  Changes are outlined on the corresponding transmittal documents dated April 10, 2024, and the policy is effective May 31, 2024. The updated M26-4 and transmittals are available here.

Accepting VASP submissions – Servicers can send VASP submissions to VA beginning May 31, 2024. VA recognizes that servicers may need time to comply, therefore servicers have until October 1, 2024, to implement. Servicers should report any IT solutions that cause extended timeframes in VASP implementation. Servicers should ensure all home retention options, including VASP, are considered prior to foreclosure. All inquiries related to this announcement are to be submitted in ServiceNow. To read VA Servicer Handbook M26-4 Appendix F: VA Home Retention Waterfall, click here. ​

Members can log in and download an AISLE resource document "VASP Overview" for complimentary use. 

Per the VA press release, “VASP is a new, last-resort tool in VA’s comprehensive suite of home retention options for eligible Veterans, active-duty Service members, and surviving spouses with VA-guaranteed home loans who are experiencing severe financial hardship. Through VASP, VA will purchase defaulted VA loans from mortgage servicers, modify the loans, and then place them in the VA-owned portfolio as direct loans. This will empower VA to work directly with eligible Veterans to adjust their loans — and their monthly payments — so they can keep their homes. With VASP, these borrowers will have a fixed 2.5% interest rate, which will provide a consistent, affordable payment for the remainder of their loan.”

Additionally, VA materials state that “Veterans will not apply directly for VASP. Instead, beginning May 31, mortgage servicers will identify qualified borrowers and submit requests on behalf of Veterans based on a review of all home retention options available and qualifying criteria. Veterans facing financial hardship should work with their mortgage servicers to explore available options.”