As of May 1, the Department of Veterans Affairs (VA) rescinded its VA Home Retention Waterfall and stopped accepting Veterans Affairs Servicing Purchase Program (VASP) submissions.

VASP was launched on May 31, 2024, veterans who were struggling financially to avoid foreclosure. The Trump administration announced in April it intended to rescind the program. At the time, VA Secretary Doug Collins said the decision was part of the administration’s cost-cutting efforts and its view that the agency is not intended to be in the business of restructuring mortgage loans. 

According to a VA circular, VASP was designed to be the final option in the VA Home Retention Waterfall to assist borrowers in finding an affordable loss mitigation option in a high-interest rate environment.

Submissions for new VASPs reported through April 30 be evaluated against the VASP qualifying criteria, and if accepted, will be reviewed for a VASP payment, subject to the VA’s determination that funds remain available for VASP.

New VASP Trial Payment Plans (TPPs) will also no longer be accepted as of May 1, but the VA will allow active TPPs to continue through Aug. 31 and will purchase successful loans, subject to the VA’s determination that funds remain available.

The VASP TPP Complete event should be reported when the TPP fails or the final payment is received; however, any active TPP where the VASP TPP Complete event is not received by Aug. 31 will be canceled.

For VASPs that were submitted by April 30 and have active TPPs, VA will review pending VASP Payment processes for all submissions received through Aug. 31. No VASP payments will be issued after Sept. 30.

As servicers discontinue use of the VA Home Retention Waterfall, veterans are to be reviewed for all options outlined in Chapter 5, and servicers are to offer the best loss mitigation option available for the borrower’s individual circumstances.