VA Partial Claim Program: The New Way to Avoid Foreclosure on a VA Loan
If you are three or more months behind on a VA-guaranteed mortgage, there is a tool available to your servicer that did not exist a year ago, and a decent chance the person answering their phone has never heard of it. That is not paranoia. VA does not require servicers to have this program operational until November 28, 2026. Until then you can be perfectly eligible and still be told “we don’t have anything like that.”
The program is the VA Partial Claim, live since June 15, 2026. VA pays your servicer the amount needed to bring your delinquent loan current, then records that amount as a balance you repay later, with no interest and no monthly payment, when you sell or refinance. For a veteran sitting on a 2.75 percent mortgage from 2021, it is the best foreclosure-avoidance option in the VA toolkit, because it is the only one that does not touch your interest rate.
Almost everything written about this program online is wrong in one of two ways. Either it describes the expired COVID-era partial claim and cites the wrong regulation, or it calls the new partial claim a second mortgage. Both errors cost real dollars. This article corrects both.
What the VA Partial Claim Program Actually Is
A partial claim is VA writing a check to your mortgage servicer on your behalf. It covers the arrearage: missed principal and interest, and depending on your situation, escrow shortages and certain servicer advances. Once VA pays, your loan is contractually current. You go back to your regular payment, at your regular rate, on your regular schedule, as if the delinquency had not happened.
The amount VA paid does not vanish. It becomes a non-interest-bearing recoverable balance that sits with the first lien. It accrues no interest. You make no monthly payment toward it. It comes due when you sell, refinance, or otherwise pay the loan off.
It is not a junior lien, and that distinction has teeth
The most common error in coverage of this program is describing the partial claim as a second mortgage or a junior lien. It is not. It is a recoverable balance that rides with the first lien, not a separate subordinate security instrument recorded against your property.
Why does that matter to you and not just to lawyers? Junior liens create friction. A second lien has to be subordinated or paid off in a refinance, which means a subordination request, a lender review, and sometimes a flat refusal that kills the deal. It also shows up in a title search as its own encumbrance. A recoverable balance riding with the first lien does none of that. It gets paid out of the payoff quote.
If you have read that a VA partial claim puts a second mortgage on your house, that source is describing either FHA’s partial claim, which genuinely is a subordinate lien, or the expired VA COVID-19 program.
The Statutory History, Because the Dates Are Widely Reported Wrong
The program was created by Public Law 119-31, signed July 30, 2025, which added 38 U.S.C. § 3737. Many published articles date the law to 2026. They are wrong. The 2026 date they are grabbing is the operational start date, not enactment.
The statute was amended by Public Law 119-37 on November 12, 2025. VA stood the program up on June 15, 2026. The authority sunsets July 30, 2030. That sunset is real: this is a five-year authority, not a permanent fixture. If Congress does not extend it, partial claims stop.
| Milestone | Date |
|---|---|
| Public Law 119-31 signed, creating 38 U.S.C. § 3737 | July 30, 2025 |
| Amended by Public Law 119-37 | November 12, 2025 |
| VA withdrew its advance notice of proposed rulemaking | January 21, 2026 |
| Program operational | June 15, 2026 |
| Servicer compliance mandatory | November 28, 2026 |
| Statutory sunset | July 30, 2030 |
There is no final rule, and the regulation everyone cites is the wrong one
There is no Federal Register final rule implementing the VA Partial Claim Program, and no VA circular announcing it. VA withdrew its advance notice of proposed rulemaking on January 21, 2026 and implemented the program through servicer guidance instead: the M26-4 Servicer Handbook, Chapter 22, plus a revised Chapter 5.
So when you see an article citing 38 CFR 36.4802 through 36.4809 as the authority for this program, close the tab. Those sections govern the expired COVID-19 partial claim program, a different program with different rules that is no longer available. Citing them for the new program is the single most common error in competing coverage. The practical consequence: if you want to put something in writing to your servicer, point at M26-4 Chapter 22. That is the document their default servicing department is supposed to be working from.
Eligibility Requirements for the VA Partial Claim
The gates are narrow and they are not negotiable. Every one of these has to be true.
| Requirement | Standard |
|---|---|
| Delinquency | Loan is 3 or more months past due |
| Property status | Property is the veteran’s primary residence |
| Payment history | At least 12 monthly payments made since origination, or 6 since the last modification |
| Trial period | A 3-month trial payment plan completed successfully |
| Frequency | One partial claim per loan, for the life of the loan |
Two of these deserve a longer look.
The primary residence requirement is not a formality. If you PCS’d, rented the house out, and fell behind, you are outside the program. Understand how VA treats occupancy when your duty station changes before you assume you are covered.
The one per loan, for the life of the loan limit should shape your timing. If you are behind because of a temporary, resolved problem, a deployment gap, a spouse’s job loss since fixed, a medical event you have recovered from, that is the moment to use it. If your income has permanently dropped, a partial claim resets you to a payment you still cannot afford and you have burned your one shot. In that case a modification is the better tool, even though it costs you your rate.
How Much VA Will Pay
The partial claim is capped as a percentage of your unpaid principal balance (UPB).
| Situation | Cap |
|---|---|
| Standard | 25% of UPB |
| Delinquency includes payments missed between March 1, 2020 and May 1, 2025 | 30% of UPB |
The 30 percent tier exists to catch veterans whose arrearage traces back to the pandemic and the forbearance unwind that followed. If any part of what you owe is from a payment missed inside that window, say so explicitly to your servicer. It changes the ceiling on what VA can advance. In practice the cap is rarely binding: 25 percent of a $300,000 balance is $75,000, far more arrearage than most veterans accumulate before foreclosure starts.
Where the Partial Claim Sits in the Home Retention Waterfall
VA servicers work a structured sequence of loss-mitigation options called the home retention waterfall. There are eight steps. The partial claim is step 7.
That placement explains something that frustrates a lot of veterans. You call, ask about the partial claim, and get offered a repayment plan instead. That is not stonewalling. The waterfall requires the servicer to evaluate the earlier options first and document why each one fails before reaching step 7. The earlier rungs run roughly in this order:
- Informal arrangements and reinstatement
- Formal repayment plan, spreading the arrearage across future payments
- Special forbearance, a temporary reduction or suspension of payments
- Loan modification, restructuring the note
If a repayment plan genuinely works for your budget, take it. It preserves your one partial claim for a future emergency. Push toward step 7 when the earlier options fail the servicer’s own affordability math, or when the only alternative is a modification that resets your rate.
Past step 8 lie the non-retention options: short sale, deed in lieu, and foreclosure. If you have already been through one, the rules for getting a VA loan after a foreclosure or bankruptcy are their own subject, as is the process to restore the entitlement tied up in the lost property.
You Cannot Apply for This Yourself
This is the most important practical fact here, and the one most coverage buries. The servicer applies to VA on the veteran’s behalf. There is no veteran-facing application form. There is no portal. There is no VA office you can walk into and file for a partial claim. VA’s counterparty in this transaction is your mortgage servicer, and the servicer is the one who submits.
What you actually control is narrow but decisive:
- Contact your servicer immediately. Not next month. Loss mitigation gets harder as the delinquency deepens and referral to foreclosure narrows the options.
- Complete the loss-mitigation package. Income documentation, hardship statement, expenses, whatever they ask for. An incomplete package is the most common reason a file stalls, and nobody is obligated to chase you for missing documents.
- Make every trial payment, on time. The 3-month trial plan is pass or fail. One late trial payment can end the evaluation.
The sentence to say on the phone, verbatim: “I want to be evaluated for the VA Partial Claim under the home retention waterfall.” That phrasing tells a trained loss-mitigation rep exactly what you are asking for and puts it in the call notes in language their own procedures use.
The Catch: Servicer Compliance Is Not Required Until November 28, 2026
Here is the gap to plan around. The program has been live since June 15, 2026, but servicers are not required to comply until November 28, 2026. In that window a fully eligible veteran can call, ask correctly, and be told the program does not exist or is not something that servicer offers.
Do not accept that answer. Do this instead:
- Escalate inside the servicer. Ask for a supervisor in default servicing or loss mitigation, not the general customer service queue. Reference M26-4 Chapter 22 by name. Ask for the “not available” statement in writing.
- Call VA directly at 877-827-3702, option 6. That routes you to a VA loan technician, not general information staff. They can contact your servicer and intervene on your loan, and they have real leverage because VA guarantees the loan the servicer is holding. This is the highest-value phone call available to a delinquent VA borrower, and most veterans never make it.
- Get free help from a HUD-approved housing counselor at 800-569-4287. The counselors are trained on loss mitigation and routinely deal with servicers who are behind on new programs.
Keep a log. Date, time, name of the person, what they told you. If this ends up in a complaint or an escalation, that log is your evidence.
The Benefit Nobody Talks About: Your Interest Rate Survives
Most coverage treats the partial claim as one interchangeable option in a list. It is not, and the reason is the rate. A loan modification restructures your note, which in the current environment generally means your rate resets toward market. If you hold a 2.75 or 3 percent loan from 2020 or 2021, a modification can raise your payment permanently even while it solves the arrearage, by hundreds of dollars a month for the remaining life of the loan. That cost dwarfs the arrearage you were trying to fix.
The partial claim does not touch the note. Same rate, same term, same payment. For a veteran with a pandemic-era rate, that rate is an asset worth protecting, arguably worth more than the equity in the house. It is the same asset that makes an IRRRL streamline refinance pointless for you right now, and the reason to be skeptical of any fix that quietly reprices your loan.
The honest downside
The recoverable balance is real money and it does come due. When you sell, it comes out of your proceeds. On a modest-equity sale, a $22,000 recoverable balance can be the difference between walking away with a down payment for the next house and walking away with nothing. When you refinance, it has to be paid at closing, which means you either bring cash or roll it into the new balance at whatever rate you are refinancing into.
None of this makes the partial claim a bad deal. It makes it a deferral, not a gift. Plan for the payoff instead of being surprised by it.
What to Do Next
- Call your servicer today if you are 60 days behind or more. Do not wait for the 3-month threshold to arrive on its own. Say: “I want to be evaluated for the VA Partial Claim under the home retention waterfall.”
- Confirm the basics before the call. Is this your primary residence? Have you made 12 payments since origination, or 6 since your last modification? Is any part of the arrearage from a payment missed between March 1, 2020 and May 1, 2025? That last one raises your cap from 25 to 30 percent of UPB.
- Submit the loss-mitigation package completely and follow up in writing within a week if you do not get confirmation of receipt.
- If the servicer says the program does not exist, escalate to a loss mitigation supervisor, cite M26-4 Chapter 22, then call VA at 877-827-3702, option 6 and ask for a loan technician. Do this the same week, not the next month.
- Call a HUD-approved housing counselor at 800-569-4287 in parallel. It is free.
- Make every trial payment on time. Three months, no exceptions. This is entirely within your control and it is what most commonly fails.
- If you are short on cash for the trial payments themselves, check what other emergency financial assistance you qualify for, and see where this sits in the broader VA home loan benefit you earned.
This article is general information, not legal or financial advice about your specific loan. An accredited Veterans Service Organization representative or a VA-accredited attorney can review your actual situation at no cost to you, and if you are facing a foreclosure referral, get that review before you sign anything a servicer puts in front of you.
The partial claim is a good program with a servicer-side implementation gap that will not close until late November 2026. Eligibility does not help you if nobody submits the request. Make the call, document everything, and escalate to VA the moment a servicer gives you an answer that does not match the law.
