In a major development for veteran homeowners facing financial hardship, the VA Home Loan Program Reform Act (also known as the Partial Claim Program) was signed into law on July 30, 2025. This innovative legislation offers a valuable new path for veterans struggling with mortgage defaults to regain stability in their housing situation.
What Is the Partial Claim Program?
The Partial Claim Program authorizes the Department of Veterans Affairs (VA) to pay a portion of a delinquent mortgage to the loan holder. The program covers up to 25% of the unpaid principal, or up to 30% for certain pandemic-era defaults that occurred between March 1, 2020 and May 1, 2025. In exchange, the VA receives a secured interest in the property. The veteran only has to repay this amount when they sell or refinance the home, typically at 0% interest. This structure allows veterans to get current on their mortgage, resume regular payments, and avoid foreclosure without an immediate financial burden or high monthly payments.
Why This Law Matters
1. A Permanent Solution After Temporary Fixes
While previous measures, like the COVID-era Partial Claim Payment (PCP) program and the Veterans Affairs Servicing Purchase (VASP), provided temporary relief, they ended abruptly in 2022 and May 2025, respectively. The new law replaces these with a more durable, legislative-backed option.
2. Preventing Foreclosures, Protecting Homes
The law comes at a critical time. The VASP program, despite helping over 17,000 veterans avoid foreclosure, lacked permanent authority and has now ended. This heightened the urgency for a new solution. The Partial Claim Program fills that gap with a statutorily authorized, long-term remedy.
3. Streamlined Administration
The law empowers the VA to act swiftly:
It can place loans in forbearance
Pay necessary amounts to prevent foreclosure
Set procedures through loss mitigation sequences, ensuring veterans receive help in a structured way
How the Program Works in Practice
1. Eligibility & Default Status
Eligible veterans are those whose VA-guaranteed primary residence loans are in default or at imminent risk of default.
2. Securing and Paying Delinquencies
The VA pays a portion of the delinquent balance on behalf of the veteran. The maximum is 25% of the outstanding balance, except for older pandemic-related defaults which can receive up to 30%.
3. No Immediate Repayment Required
Repayment only occurs when the loan is paid off, either by selling or refinancing the home, and at zero interest.
4. Loss Mitigation Sequence Required
Lenders must follow a mandatory sequence of loss mitigation options, which now includes the partial claim agreement. This ensures veterans are offered structured help before facing foreclosure.
5. Oversight and Audit
The law allows the VA to establish standards, require certifications from lenders, and conduct random audits to ensure compliance.
What It Means for Veterans
- Breathe Easier:For veterans in distress, this law removes the immediate pressure of catching up on all missed mortgage payments.
- Stay Home:By avoiding foreclosure, veterans can keep their homes while recovering financially.
- Transparent and Fair:With built-in oversight procedures, the system ensures integrity and consistency in how relief is administered.
- Lasting Relief:Unlike prior temporary measures, this law provides a permanent, legal framework for assistance.
Closing Thoughts
The VA Home Loan Program Reform Act marks a pivotal shift in how veteran homeowners in distress are supported. It's a thoughtful, well-structured approach centered around the partial claim tool that balances flexibility for individual veterans with fiscal responsibility and accountability. For veterans and advocates navigating loss mitigation options, this program brings hope and clarity to a landscape that has often been reactive and temporary.
Need Help with Your VA Loan?
If you're a veteran facing mortgage difficulties, our HUD-certified counselors can help you understand your options under the new Partial Claim Program.
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