VA Borrowers Offered Foreclosure Avoidance Option
The Department of Veterans Affairs Partial Claim Program is a foreclosure avoidance option for veterans who fall behind on their VA mortgage payments.
It began operations in the summer of 2026, under the authority granted by the VA Home Loan Program Reform Act. That bill was signed into law in 2025 and intended as a replacement for the Veterans Affairs Servicing Purchase initiative, which concluded in 2025.
VA Borrowers Offered Foreclosure Avoidance Option
This program involves a process where mortgage lenders identify clients who are veterans in VA home loan default. Once identified, the veteran is offered a three-month trial payment plan to determine if the veteran can afford to remain in the home.
If the veteran makes these payments, the servicer pays the overdue balance, and the Department of Veterans Affairs then reimburses the VA lender.
The repaid amount becomes a subordinate lien on the property, which means the veteran does not owe monthly payments on the claimed amount; the debt becomes due when the home is sold, refinanced, or the mortgage is paid in full.
The property must serve as the veteran’s primary residence; investment properties and second homes do not qualify for the VA partial claim option.
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How to Prepare
For best results under this program, VA borrowers should prepare a “hardship file” in the initial application stage that explains the reason for the delinquency, such as job loss or medical events. It should include proof of income and bank statements. Documentation assists the servicer in deciding.
If a servicer denies a request, they must provide the reason in writing. Borrowers have 14 days to appeal a denial if they applied within the timeframe before a foreclosure sale.
Caveats for VA Borrowers
The Department of Veterans Affairs claims that home retention and foreclosure prevention are this program’s goals, but as with many programs created under the Doug Collins-led Department of Veterans Affairs, there are important caveats to learn before you can safely assume this program will benefit you.
- The Partial Claim Program provides a mechanism to address defaults resulting from hardship but if you are exploring this option, keep in mind that it does not offer cash to the borrower.
- This program is not a form of debt forgiveness.
- The veteran must demonstrate financial need.
- The VA assistance amount is capped at 25 percent of the unpaid principal balance.
- There is additional consideration for veterans who missed payments during the COVID-19 pandemic; in these cases, the cap increases to 30 percent.
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Legal Warnings?
Legal experts caution that the program does not fully protect borrowers against VA loan foreclosure. Some borrowers may assume that communication with the Department of Veterans Affairs on these issues will stop a foreclosure that has already begun, but unless a court grants a stay, the foreclosure will continue.
Veterans served with papers must respond within the provided window. Missing foreclosure deadlines may result in your loss of the right to contest the foreclosure in court, and this plan has raised concerns that using it could strip away home equity.
What to Know About Foreclosure Avoidance
The Department of Veterans Affairs encourages veterans to act early. Contacting the loan servicer at the first sign of distress increases the likelihood of finding a solution. Servicers have an incentive to avoid foreclosure because the process is expensive for them.
Veterans struggling to reach an agreement with their servicer can contact the Department of Veterans Affairs at 877-827-3702 and press option 6.
The program will expire on July 30, 2030, unless Congress acts to extend the authority. Veterans should not assume the program is a permanent fixture in VA mortgages.
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About the author
Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.
