We are now witnessing an outcry from Democrats, loan servicers and the media over the prospect of Congress scaling back the Department of Veterans Affairs’s new mortgage bailout program, the Veterans Affairs Servicing Purchase (VASP) program. If the program is curtailed as proposed by Rep. Derrick Van Orden (Wis.), they warn, tens of thousands of veterans — perhaps as many as 80,000 — will lose their homes.
But the reality is far different, and far more dangerous. Left unchecked, VASP risks turning veteran homeownership into a costly, unsustainable entitlement, and taxpayers will be left holding the bag.
No one wants to see the nation’s heroes lose their homes. But a housing finance system that eliminates the possibility of foreclosure is inherently unsustainable, and that is exactly what the VASP program does. Launched under the Biden administration, VASP upends the traditional balance by having the VA buy troubled loans, hold them on its books, and absorb all future losses, while servicers walk away whole.
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Tobias Peter is a Senior Fellow and Codirector of the AEI Housing Center.
The views expressed in this article are the writer’s own.