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NCSHA Washington Report | June 6, 2025

Published on June 6, 2025

NCSHA Washington Report - 2025The U.S. Department of Veterans Affairs can claim much of the credit for one of the most significant successes in federal housing policy in recent years: the sustained reduction in veteran homelessness, which is down 12 percent since 2020 and more than 55 percent since 2010.

Unfortunately, the VA has stumbled badly in helping vets with agency-insured home mortgage loans avoid financial peril through Covid and into today’s relatively high interest rate environment.

During the pandemic, the VA — like FHA, USDA, Fannie, and Freddie — developed more flexible and forgiving repayment requirements to help their insured homeowners avoid foreclosure. The programs were shown to be highly successful, saving as many as 500,000 families combined from losing their homes.

VA ended its main relief effort in 2022, citing budget constraints, leaving thousands in precarious housing and financial situations. Finally, in 2024, the agency rolled out the Veterans Servicing Purchase Program (VASP) “to provide a last-resort foreclosure prevention option to US military veterans, active-duty service members, and surviving spouses experiencing financial hardship.”

While that program fell short of its potential, it “provided critical relief to thousands of veterans whose loan payments became unaffordable in today’s higher rate environment” and served as “an essential safety net for borrowers who had no other options.” But VA decided to end the program, as of last month, apparently in response to concerns from House Republicans.

Mortgage Bankers Association President and CEO Bob Broeksmit took strong exception to one of them, saying, “Any characterization of VASP as a ‘lender bailout’ is patently false and entirely inappropriate, given that the mortgage industry voluntarily honored a foreclosure moratorium for months until the VA was able to provide VASP as the only available solution.”

“The VASP program did have issues, including exposing VA to more risk and, detractors argued, it exceeded Congressional intent related to the VA’s authority to purchase loans,” wrote Gate House Strategies’ Keith Becker. “Regardless, VASP was ended without providing a tool in its place that could work for borrowers in today’s economic environment.”

Some observers see major problems ahead, specifically significantly more foreclosures, “maybe 50,000 – 60,000 more than would have occurred” when VASP was in place.

The House has passed a bill to provide VA with a stable, workable set of borrower relief tools similar to what FHA has. The Senate, it is hoped, will do the same soon.

In the meantime, NCSHA is among a group of national housing organizations urging the VA to use authority it already has to create a stopgap. The group argues a dormant program “could be temporarily restored with the issuance of a one sentence Interim Final Rule … that could allow for its use through the end of 2025,” relying on statutory authority VA has used for 60 years to help vets in need.

Stockton-Williams-Washington-ReportStockton Williams | Executive Director

In This Issue

Dettlaff Appointed to Lead NDHFA
The North Dakota Industrial Commission has appointed Brandon Dettlaff executive director of the North Dakota Housing Finance Agency (NDHFA). Dettlaff began his career with the agency in 2007 and has held several positions, moving into the role of homeownership director in May 2020. Dettlaff will assume the helm upon the June 13 retirement of current executive director Dave Flohr, on which we reported last week.

Reconciliation Legislation Is in the Senate’s Court
With Congress back in Washington after the Memorial Day recess, all eyes are on the Senate now that the House has passed the One Big Beautiful Bill Act — aka the spending and tax reconciliation legislation that includes a major expansion of the Housing Credit program. Senate Majority Leader John Thune (R-SD) faces a challenging task of making changes to reflect Senate priorities without upsetting the delicate balance struck in the House. Thune hopes to advance the bill through the Senate by month’s end, giving the House time to pass the Senate-amended version before July 4, when Republican leaders hope to have it ready for the president’s signature. Senate Republicans met this week privately and with President Trump to consider how to address cuts to safety net programs like Medicaid, the elimination and accelerated phase-out of clean energy tax credits, the tenure of various tax cuts, and the deal House members struck on the state and local tax (SALT) deduction limit.

NCSHA is using this time to make sure Senate Republicans understand the benefits their states would get from the 12.5 percent increase in the Housing Credit 9 percent program, lowering the bond financing test to 25 percent, and basis boosts for properties in rural and Native American areas, all for years 2025 to 2029, to ensure these remain in the bill as it advances.

White House Releases Additional FY26 Budget Documents
The Trump White House has released supporting materials for its fiscal year 2026 (FY26) budget request, including an appendix and agency Congressional Justifications. These additional materials provide significant new details on the administration’s vision for the federal government’s involvement in affordable housing, including consolidating existing rental assistance programs into a single state block grant and eliminating existing block grants like the HOME Investment Partnerships and Community Development Block Grant programs. Read more on the FY26 budget request in NCSHA’s blog.

House Appropriations Subcommittee Approves FY26 USDA Funding Bill
On Thursday, the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies voted to advance the FY26 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies bill to the House Appropriations Committee. The bill provides $25.23 billion for the U.S. Department of Agriculture’s discretionary spending programs, $1.16 billion or 4.2 percent less than current FY25 funding levels and a $2 billion increase compared to the recently released President’s Budget Request, referenced above. Two housing programs administered by USDA — the Section 502 Single-Family Direct Loan Program and Section 542 Rural Voucher Assistance Program — which were unfunded in the President’s Budget Request, would receive current FY25 funding levels at $880 million and $48 million, respectively. The full House Appropriations Committee is scheduled to mark up the bill next Wednesday, June 11.

FHA Posts Single-Family Loan Servicing Program Changes
On Tuesday, the Federal Housing Administration (FHA) published Mortgagee Letter (ML) 2025-14, Updates to Modernization of Engagement with Borrowers in Default and Loss Mitigation. This ML revises and streamlines the “face-to-face” meeting requirements previously established in ML 2024-24, Modernization of Engagement with Borrowers in Default, which was published on December 4, 2024, and also provides clarifications to ML 2025-12,Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options, which was published on April 15, 2025.

ML 2025-14 simplifies the requirements around engaging with defaulted borrowers by updating what counts as a reasonable effort to arrange an interview with a borrower in default and removing unnecessarily burdensome requirements associated with such interviews, including those pertaining to “verifiable attempts.” These changes are similar to recommendations NCSHA made in our April 22 letter to Department of Housing and Urban Development Secretary Scott Turner. The provisions in Attachment 1 of ML 2025-14 may be implemented immediately but must be implemented no later than July 1. The provisions in Attachment 2 must be implemented on October 1.

OMB Sends $9.4B Rescissions Package to Congress
The Office of Management and Budget has sent a package of proposed rescissions in federal spending totaling $9.4 billion to Congress for its consideration. Notably, none of the proposed spending cuts relate to housing, either at HUD or USDA; most involve foreign assistance programs previously paused or cancelled by the Department of Government Efficiency.

HUD Seeks Comments on Housing Credit Data Collection
This week, HUD published a notice seeking comments on its information collection processes associated with HUD’s LIHTC Property Data Collection Form (HUD-52695) and the HUD LIHTC Tenant Data Collection Form (HUD-52697), which state Housing Credit agencies use to submit data to HUD. HUD is proposing to combine the race and ethnicity fields so that ethnicity will be a category under the race field and to add a new race category for those of Middle Eastern or North African descent. Any changes adopted would be effective for data collection in Fall 2026. Comments are due by August 1, 2025.

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