Trump's VA killed a home loan program. Vets are now losing their homes because of it

More than 10,000 veterans lost their homes to foreclosure since May of last year, when the Trump administration shut down a key safety net in the VA home loan program, according to the latest industry data. That is the highest pace of foreclosures for VA loans in a decade.

Another 90,000 vets are heading toward foreclosure. This comes after a years-long debacle inside the Department of Veterans Affairs has whiplashed thousands of vets between various enacted and canceled programs and left many of them on the brink of losing their homes — often through no fault of their own.

A loan backed by the VA is considered one of the most valuable benefits for military service members and has helped millions achieve homeownership. But for nearly a year now, vets have had worse protections and options than most other homeowners if they fall behind.

" We should have something in place to try to stem people from losing their homes," said Steve Sharpe, an attorney with the nonprofit National Consumer Law Center.

The Trump administration was warned this would happen.

The roots of the crisis go back to a mistake made during the Biden administration, when the VA abruptly shut down a pandemic assistance program while thousands of vets were still in the middle of it. Struggling homeowners who used the program to skip some mortgage payments suddenly had to pay those payments back all at once — an unaffordable burden for many of them. After an NPR investigation exposed the problem, the VA halted foreclosures for a year while it rolled out a fix.

Republicans in Congress, citing costs, wanted to kill that fix and replace it with something else. But last spring, the mortgage industry warned that shutting down the program without first replacing it would be a disaster.

“Foreclosure. Period. That’s really where it’s gonna come to,” warned Elizabeth Balce, representing the Mortgage Bankers Association, at a hearing in March of 2025 before the House Committee on Veterans’ Affairs.

Less than two months later, the Trump administration shut down the rescue program anyway.

Since then, more than 10,000 veterans have lost their homes through foreclosure sales, according to ICE Mortgage Technology, which tracks such data.

It’s unclear how many of those veterans could have avoided foreclosure through the rescue plan, called VASP, or the VA Servicing Purchase program. But mortgage industry insiders told NPR it’s clear that some of those vets had enough disability pay or other income and would have been able to keep their homes had VA not shut down VASP with virtually no warning.

VA officials did not respond to NPR’s questions about why the agency shut down VASP without first replacing it with anything else.

Meanwhile, 90,000 more veterans are currently behind on their mortgages or in the foreclosure process. The VA now says it’s coming out with a new program that could help many of those vets, but it still won’t be up and running for months.

Housing and industry groups warn that the new program, when it is finally operational, could still leave those vets with worse options than other homeowners, and push their monthly payments up by hundreds of dollars a month.

Buying a house brought stability

For Leann Ledford, one of the hardest things right now is that she’s been here before and fought her way out. “When you lose your home, your house, nothing else matters,” she said.

Ledford’s husband is a Marine who was hurt in Afghanistan. He has PTSD and a brain injury. It took a long time to get through the VA’s red tape to approve his disability pay, and in the meantime, his condition got so bad he couldn’t work.

“At first, we didn’t know whether it was a stroke or a seizure or what was going on,” Ledford remembers.

She had to stop working to care for her husband, and then they couldn’t afford rent. The couple ended up living out of a trailer hitched to their truck, with their young son, for six months while they waited for his disability paperwork to go through.

But then they got back on their feet. They even bought a house in January 2021 with a loan backed by the VA.

That’s just what the VA loan is supposed to be — a life-changing benefit to give veterans a leg up into the middle class and homeownership.

The house is right across the street from the neighborhood’s public school. “So our son started at the elementary school,” which, Ledford said, has been a “huge relief.”

“Since my husband hasn’t been able to drive, you know, I have to manage everything,” she said.

As both she and her husband’s stress levels fell, his symptoms improved. And their son has had a stable home. " He’s been able to live over half his life in our house now, and he doesn’t remember all the bad years ‘cause he was too little," Ledford said.

But just a year after they bought their house, a cascade of actions by the Department of Veterans Affairs entangled them, and thousands of others, in a years-long ordeal where they weren’t permitted to pay their mortgage. That’s now pushed them into foreclosure and the brink of eviction.

" We didn’t know that the foreclosure sale went through until somebody knocked on the front door," Ledford said.

Bait and switched by the VA

For the Ledfords, this all started back in 2022 after they had to replace their furnace and were hit with other costly home repairs. Their lender, Freedom Mortgage, told them they could get help from what was called a mortgage forbearance. The COVID-era program would let them pause making payments.

" They told us it was for a year, and they would check in after six months," Ledford said. “And then we would just pick up our payments at the end of the year … It felt like such a relief for us.”

She says Freedom told her the skipped payments would then be moved to the back of her loan term, to be paid later when they refinanced or sold the house.

In the wake of the pandemic, millions of Americans with other types of federally backed mortgages took advantage of such forbearance programs.

But then, in October of 2022, the Biden administration shut down a key part of the VA’s forbearance program that had enabled the skipped payments to be deferred.

As a result, tens of thousands of veterans like the Ledfords were told they suddenly needed to pay that year’s worth of payments in a lump sum.

" And we’re like, wait a minute, what?" Leann Ledford recalled.

That would have been tens of thousands of dollars, which they, and most veterans in the program, couldn’t afford. Or, they would have to accept a refinanced loan at the current, much higher interest rates. Rates had sharply risen from around 3% to 7%, and that new loan would have raised the Ledfords’ payment by about $1,000 a month. They couldn’t afford either option.

After NPR reported in late 2023 that 40,000 vets like the Ledfords had been trapped this way, with no affordable way to get current on their loans, the VA halted foreclosures across the country for a year while it rolled out a rescue program.

Trump’s VA kills Biden-era fix

Once it was finally up and running by early 2025, the VA’s rescue program, VASP, was starting to save large numbers of vets and their families from foreclosure. It gave more than 33,000 veterans who were behind on their payments new, low-cost mortgages with an interest rate of 2.5%.

But only months after VASP was fully functional and helping vets on that scale, the Trump administration had taken office and killed it. On May 1, 2025, amid fear of the potential cost, the VA abruptly did away with this safety net, giving mortgage servicers and even its own VA staff just one-week’s notice. Vets who were already enrolled would keep those low-cost, affordable loans. But the door was slammed shut for any more veterans.

The Ledfords and other vets who needed the help hadn’t managed to get enrolled yet.

“I found out that [VASP] was ending and I called the VA loan technician and they didn’t even know yet,” said Ledford. “They had to go figure out what was going on.”

Mortgage companies told NPR back then that they were scrambling to enroll as many vets as they could, but the abrupt closure of the program caught them off guard.

“What the hell?”

Many veterans were hurt in a different way, too. After VASP was shut down, vets who didn’t get enrolled in time felt they had no choice but to accept the offer of a loan modification, even though the higher interest rate meant punishingly higher payments.

Army vet Jon Henry, from Kansas City, Mo., wound up in a modified loan with monthly payments that are $380 higher than his original mortgage.

“It’s a struggle,” said Henry, who served in Iraq during the first Gulf War in a unit meant to counter chemical warfare attacks. “Especially with everything else being inflated in the country, you know, with groceries, gas … I’m like, what the hell?”

Henry, who lives outside Kansas City, Mo., fell behind on his mortgage after losing his job managing a manufacturing plant. He’s working again now and just needed to catch up on his payments.

Veterans who’ve fallen behind on their loans are in a worse position than most nonveteran homeowners. Mortgages backed by the government through Fannie Mae, Freddie Mac or FHA all have emergency options for delinquent borrowers that don’t raise their interest rate or monthly payment. But that’s not true anymore for veterans with loans backed by the VA.

Mortgage rates have been between 6% and 7% over the past 10 months since VASP shut down. That means the other option for a VA loan, a loan modification, often sharply raises the monthly payment because many vets originally got their loans when rates were lower. Many veterans have to choose between selling their house, getting foreclosed on, or accepting a much higher-cost mortgage.

“It hurts paying $3,200 a month,” Shante Benfatto told NPR. She served in Afghanistan and is rated 100% disabled by the VA. She and her husband fell behind on payments when he was between jobs. They say they tried for months to get into the VASP program but that their lender didn’t get all their paperwork together before the VA suddenly shut it down. After receiving letters threatening foreclosure, the Benfattos reluctantly accepted a new modified mortgage with payments about $300 a month higher than their original loan.

“We’re paying late because we can’t afford to pay the extra money until the end of the month, until she gets her disability,” said her husband, Mark. The late fees add an additional $105 to their monthly mortgage bill.

Some vets have seen their payments go up by a lot more.

Jerome Thomas, an Air Force vet in Port Charlotte, Fla., got hit with a payment that’s $800 higher every month. His interest rate more than doubled to 6.8%. He said his lender told him he either had to agree to that or get foreclosed on, so he says he felt forced into the higher-cost loan.

“I told them I can’t afford to pay it,” Thomas, who’s lived in his house for 10 years, told NPR. And as he predicted, he’s now behind on that modified loan and is receiving letters warning he’s headed into foreclosure. " I got my three kids in here, I’ve got the wife, she’s a teacher … it’s bad."

Even when the Trump administration’s new loan program is up and running, it won’t help vets like Thomas, Benfatto, or Henry who were already forced to accept loans with higher interest rates. It won’t lower their payments back down to where they were before. In theory, some vets could refinance if mortgage rates drop sharply, but rates have been rising again.

The VA’s new fix

The Trump administration’s new program, when it’s up and running, will work by allowing vets to take their missed payments and move them to the back of their loan term. So they’ll get to keep their current mortgage and interest rate. That should be a big help to vets who have a relatively low rate.

There’s a qualifier in the current draft. The way it’s written, the VA is telling mortgage companies that if a new, modified loan at a higher interest rate only raises a veteran’s monthly payment by up to 15%, they must place vets into that more costly loan.

So a veteran with a $2,000 monthly mortgage payment could still be pushed into a modified loan that raises their payment by up to $300 a month. And they wouldn’t be given the option of moving their missed payments to the back of their loan and keeping their original, lower-cost mortgage.

The mortgage industry is telling the VA that that doesn’t make any sense.

“As drafted, Veterans will continue to have worse options than similarly situated non-Veterans,” Pete Mills, an executive with the Mortgage Bankers Association, wrote in a letter to the VA.

“Payment reduction is the most important driver of modification performance, and the current policy will lead to higher redefault rates,” Mills said. The association, along with housing groups, is recommending that the VA put a loan with a higher payment at the very bottom of its so-called waterfall of options for homeowners who are behind on payments.

“The VA should restructure the waterfall to only allow increased monthly payments as a last resort,” Mills said.

Housing advocates are also pushing the VA to ask the mortgage industry to hold off foreclosing on vets until its new program gets up and running in a few months. That would buy time for the tens of thousands of vets who are already behind on their loans or in the foreclosure process.

“We’re talking about a heck of a lot of folks,” said Sharpe, with the National Consumer Law Center.

Eviction looms

It’s already too late for Leann Ledford, her combat-disabled husband and their 10-year-old son in Spokane, Wash. Freedom Mortgage sold their house in a foreclosure sale, and it’s now owned by the VA and they’re being told they need to leave.

Ledford’s husband has spiraled. He’s having seizures again, and the issue made him so stressed that he didn’t want to be interviewed for this story. " It has really impacted him, and he is really struggling," she said.

The VA said in a statement that it has helped thousands of vets to avoid foreclosure, but didn’t offer specifics. VA press secretary Pete Kasperowicz wrote, “Per federal law, VA’s home loan program is based on the premise that while Veterans may need some assistance, they must generally be able to make their mortgage payments.”

The Ledfords, who receive $3,971 a month in Ledford’s husband’s disability pay, say they could have afforded mortgage payments under the VASP program. And they could have afforded their original mortgage with its $1,447 monthly payment, had VA’s new program been up and running and allowed them to move their missed payments to the back of their loan term. But because VA killed VASP before standing up the new program, they were stranded without either option.

“VA worked tirelessly with the Ledford family to help keep them in their home. However, they were nearly four years behind on their mortgage payment, and the decision to foreclose on their mortgage was made by Freedom Mortgage,” Kasperowicz said. Freedom Mortgage declined repeated requests for an interview or statement.

That VA statement ignores the fact that the Ledfords, like many other vets, were not allowed to resume making mortgage payments after a series of the VA’s own missteps trapped them in a bureaucratic quagmire. They were told to just keep applying for help through a loss mitigation process that dragged on for years and in the end, never offered them any actual assistance.

The VA did not respond to questions about whether it could do anything to save the Ledfords from losing their home, since the VA now owns it following the foreclosure sale. The only offer from VA so far was $3,500 to vacate the house in what’s known as “cash for keys.”

The Ledfords have been told that to get even that much help, they need to vacate their home by April 3.

In its written statement, the VA said it stands ready to assist the Ledfords with health care services as needed.

NPR’s Robert Benincasa contributed to this story.