Understanding the VA's New Partial Claim Program: Opportunities for Veterans Facing Foreclosure

On June 15, 2026, the VA reinstated a critical foreclosure prevention measure, the Partial Claim Program, which aims to help veterans who are behind on VA-guaranteed mortgages. This program is significant, particularly as it follows a troubling period where over 10,000 veterans lost their homes due to foreclosure during the previous year. However, timing is crucial, as servicers may not yet have the capability to process partial claims, which must be operational by November 28, 2026.

Previous to this development, veterans in severe payment distress relied on the Veterans Affairs Servicing Purchase (VASP) program, which allowed the VA to take over defaulted loans and restructure them. VASP was discontinued in May 2025, leaving veterans with limited options until Congress introduced the VA Home Loan Program Reform Act, signed into law on July 30, 2025. This act facilitated the transition to the new Partial Claim Program, with implementations becoming effective on June 1, 2026.

How the Partial Claim Program Works

At its core, a partial claim is a financial bridge that enables veterans to catch up on missed payments. When borrowers fall behind, servicers will initiate a three-month trial payment plan. If the borrower successfully completes this period, the servicer advances funds to settle the outstanding payments, and in turn, requests reimbursement from the VA. To secure this assistance, the borrower must sign a subordinate lien, which represents an additional claim against their property. Notably, this second lien incurs no interest or monthly payments and remains payable upon refinancing or selling the home.

Loss mitigation is now a priority, with the VA emphasizing the Partial Claim Program as a go-to option before moving to longer-term solutions, such as a loan modification. The program covers up to 25% of a borrower's unpaid principal balance, and an increase to 30% is available for those who missed payments during the pandemic period between March 2020 and May 2025. This advance encompasses principal, interest, overdue taxes, homeowners insurance, and HOA dues.

Key Considerations for Borrowers

A common misunderstanding surrounding partial claims is the notion of forgiveness. It's not an erasure of the debt; instead, it serves to rearrange it. For instance, if a veteran is $12,000 in arrears on a $280,000 mortgage, the partial claim allows for the elimination of that arrearage without altering the primary loan's monthly payment. This dynamic can affect future refinancing options, as the second lien must be addressed when making any changes to the mortgage.

This isn't a perfect solution, though. Critics argue that unlike VASP, which provided loan restructuring, partial claims merely address arrears while maintaining the original payment structure. As a result, if borrowers' financial hardships stem from an unmanageable monthly payment, they might need to consider a loan modification instead. Given that many veterans still face delinquency, understanding the available options is vital. Data from NPR highlighted the struggle, revealing a staggering number of veterans—over 90,000—still facing payment difficulties, alongside the fallout from VASP's end.

Navigating Servicer Communication Before the Deadline

As the industry adjusts, veterans are encouraged to communicate proactively with their loan servicers. All servicers were permitted to begin submitting partial claims as of June 15, but they must comply with full functionality by the November deadline. It's critical to clarify that an initial denial from servicers may simply indicate that they are not yet equipped to process partial claims rather than a failure on the borrower's part to qualify.

When contacting a servicer's loss mitigation department, veterans would benefit from asking these essential questions:

1. Are you currently accepting partial claim submissions? If not, when will you start?
2. What loss mitigation options are available for my situation at this moment?
3. What stage am I at in the loss mitigation waterfall?
4. Can you provide that information in writing?

Veterans should not hesitate to reach out to VA loan technicians directly if they encounter unclear answers or if foreclosure timelines are concerning. The VA can assist with questions about VA loans and may provide support for non-VA loans as well.

Lastly, while some representatives in Congress have pushed for a moratorium on foreclosures until the Partial Claim Program is operational, no such measures have been enacted as of now. Thus, due diligence remains essential for veterans facing potential foreclosure. The potential relief is real, but access varies widely until the end of November. Veterans who actively seek information and clarification about their options stand the best chance of retaining their homes.