VA issued Circular 26-25-02, rescinding VA’s home retention waterfall and ending the VA Servicing Purchase (VASP) program. Per the Circular, as of May 1, 2025, the home retention waterfall is rescinded and VA will stop accepting VASP submissions, including new VASP Trial Payment Plans (TPPs). However, VA will allow active TPPs to continue through August 31, 2025, and will purchase successful loans, subject to VA’s determination that funds remain available for VASP. Note that, servicers are still required to review borrowers for all applicable loss mitigation options outlined in Chapter 5 of the Servicer Handbook, and offer the best loss mitigation option available for the borrower’s individual circumstances. In addition, VA removed requirements relating to the 10% reduction in monthly principal and interest payment in connection with a 30-year and 40-year modification. The Circular went into effect April 23, 2025.
Click to view the VA Circular 26-25-02: https://www.tenaco.com/wp-content/uploads/2025/05/VA-Circular-26-25-02-04-23-25.pdf
