Hi all, I wanted to let you know that we now have 96 signatures on this petition. Thank you so much for your support!
Would you help me get more signatures by sharing this petition with ten other people on social media? Facebook groups, SMS chats, Twitter, email and WhatsApp all work great. If more of us sign, we can’t be ignored!
Thanks again for supporting this cause.
Addressing Inequities in the VA's VASP Program: A Call to Action for Veterans in Bankruptcy
At KOVH Foundation, we are dedicated to ensuring that veteran families have the resources and support they need to maintain stable housing. Recently, we have identified a serious flaw in the Veterans Assistance Servicing Program (VASP) that unfairly excludes veterans currently in active bankruptcy, particularly Chapter 13. This exclusion not only undermines veterans' efforts to recover financially but also exacerbates the risk of foreclosure for those who need assistance the most.
Moreover, even for veterans who do qualify for VASP, loan modifications often result in higher monthly payments and interest rates, further burdening families already facing financial hardship. It is time for these policies to be revisited and reformed to ensure they align with the VA's mission of supporting our nation's veterans.
Understanding the VA's VASP Program
The Veterans Assistance Servicing Program (VASP) was introduced to help veterans avoid foreclosure by offering loan modifications to restructure mortgage terms. The program is intended to provide relief by making mortgage payments more manageable for veterans facing financial difficulties.
However, the program currently excludes veterans in active Chapter 13 bankruptcy. This exclusion is not only unjust but also counterproductive, as it prevents veterans who are following a legal, court-approved pathway to resolve their debts from accessing critical assistance.
The Role of Chapter 13 Bankruptcy in Financial Recovery
Chapter 13 bankruptcy is a structured, court-supervised process that allows individuals to catch up on debts through a manageable repayment plan spanning 3 to 5 years. For many veterans, this process provides an opportunity to stabilize their finances while keeping their homes.
A loan modification during Chapter 13 bankruptcy can be an essential tool for veterans, as it:
Resolves Mortgage Defaults: A successful modification can cure past due amounts and bring the mortgage current.
Reduces Trustee Oversight: By restructuring the mortgage, veterans may be able to remove the loan from the bankruptcy repayment plan, simplifying their path forward.
Supports Long-Term Recovery: Court-approved loan modifications align with the goals of Chapter 13 bankruptcy—to help individuals regain financial stability.
The VA’s blanket exclusion of veterans in active bankruptcy ignores these benefits and penalizes those who are taking responsible steps to manage their debts.
The Problem With Loan Modifications Under VASP
While the intent of loan modifications is to provide relief, the reality is that modifications under VASP often lead to terms that are less affordable and, in some cases, unsustainable. Key issues include:
Capitalization of Arrears: Past due payments, penalties, and fees are often added to the loan principal, resulting in a higher loan balance.
Higher Interest Rates: Veterans may face increased interest rates, especially in a rising rate environment, which drives up monthly payments.
Extended Loan Terms: Extending a mortgage to 40 years may temporarily lower payments but significantly increases the total interest paid over the life of the loan.
Escrow Adjustments: Escrow shortages for property taxes and insurance are folded into the modified loan, further increasing costs.
For veterans already struggling to manage their finances, these changes can exacerbate their financial hardship instead of providing the intended relief.
Why the VA's Exclusion Policy Needs to Change
The VA's decision to exclude veterans in active Chapter 13 bankruptcy from VASP is both unnecessary and harmful. Here’s why:
Legally Compatible: Loan modifications and Chapter 13 bankruptcy are fully compatible. Court approval is a standard step, and modifications can support veterans' financial recovery.
Unnecessary Delays: Forcing veterans to wait until bankruptcy concludes denies them access to timely assistance, increasing the risk of foreclosure.
Counterproductive Outcomes: Denying access to VASP leaves veterans without options, often leading to worsened financial conditions.
Punishment for Responsible Action: Veterans in Chapter 13 are actively working to resolve their debts. Excluding them from VASP penalizes their responsible efforts to regain stability.
The exclusion policy is a failure to recognize that bankruptcy is not the end of financial recovery—it is a tool that, when used correctly, helps veterans overcome their financial challenges.
A Path Forward: Reforming VASP Policies
To ensure the VASP program truly serves its purpose, we urge the VA to consider the following reforms:
Include Veterans in Bankruptcy: Veterans in active Chapter 13 bankruptcy must be eligible for VASP assistance, provided court approval is obtained.
Ensure Affordability: Loan modifications under VASP must prioritize sustainable and affordable payments, rather than increasing financial burdens.
Offer Alternatives to Modifications: For veterans who cannot afford modified payments, alternative solutions such as principal reductions, temporary forbearance, or targeted payment assistance should be available.
Promote Transparency: Veterans must be fully informed about the terms of loan modifications, including any potential increases in payments or interest rates.
These reforms will align the VASP program with its intended mission: to help veterans stay in their homes and achieve long-term financial stability.
Taking Action: Ensuring No Veteran Is Left Behind
The VA exists to serve those who have served our country. By excluding veterans in bankruptcy and offering loan modifications that often increase payments, the VA’s policies fall short of this mission.
At KOVH Foundation, we believe that no veteran should lose their home due to flawed policies. Veterans who are taking legal, responsible steps to recover from financial hardship deserve full access to foreclosure prevention resources.
We are calling on policymakers, veteran organizations, and advocates to join us in this fight. Together, we can demand fair treatment for veterans and meaningful reforms to the VASP program.
How You Can Help
Sign the Petition: Support our call for policy changes to VASP by signing our petition on Change.org.
Spread Awareness: Share this article to help us raise awareness of this critical issue.
Contact Your Representatives: Urge lawmakers to support reforms that ensure veterans have fair access to housing assistance programs.
Our veterans have fought for us. Now, it is our turn to fight for them.