VA Partial Claim Program
The VA Partial Claim Program is the new foreclosure-prevention framework created to give struggling VA borrowers another path to save their homes without forcing the VA to become the long-term holder of the first mortgage. In plain English, it is designed to cure delinquent payments by moving part of the defaulted balance into a separate deferred lien instead of pushing the loan straight toward foreclosure.
That matters because the older VASP program stopped taking new submissions, and the VA needed a replacement tool that looked more like the partial-claim structures already used in other federal housing programs. The 2026 story is still mostly about implementation. The program now has legal authority, but many of the operating rules are still being formalized through draft servicing policy.
Next step: Check Your VA Eligibility
Current Status
- Legally established: The program was authorized through the VA Home Loan Program Reform Act, which created a permanent VA partial-claim authority.
- Still being implemented: The VA has been releasing draft policy changes to update the servicing handbook and spell out how the new option will operate in practice.
- Rulemaking is the real 2026 story: The authority exists, but the details borrowers and servicers care about are still being locked down in policy documents.
- Main takeaway: This is not a rumor or a pilot concept anymore, but it is also not fully mature in the way older VA servicing tools were.
How It Works
- Purpose: The VA advances funds to cure the borrower’s delinquency so the first mortgage can be brought current.
- Structure: The assistance amount becomes a no-interest, deferred subordinate lien rather than an immediate monthly repayment obligation.
- When it gets repaid: The subordinate balance is generally due later when the first mortgage is paid off, the home is sold, or the loan is refinanced.
- Trial plan matters: Draft policies have pointed to a successful trial-payment period before the borrower receives final partial-claim assistance.
Eligibility Rules
- Primary-residence focus: The tool is aimed at VA-backed loans on primary homes that are already in default or at serious risk of default.
- Usage is limited: Draft rules have generally treated the program as a one-time relief option per loan, with narrower exceptions tied to extraordinary events such as declared disasters.
- Payment history can matter: Proposed guidance has suggested minimum seasoning and payment-history requirements before a loan can use the option.
- Cap matters too: Draft policy summaries have described a limit tied to a percentage of the unpaid principal balance, which controls how much delinquency the VA can absorb into the new subordinate lien.
VASP Replacement
- VASP is no longer the path forward: The Veterans Affairs Servicing Purchase program stopped accepting new submissions, which created the need for a replacement safety net.
- The new model is structurally different: Instead of VA stepping into the first-loan position the same way VASP did, the partial-claim concept is built around curing arrears through a deferred second lien.
- Why that matters: This design is meant to be more scalable and more consistent with other federal foreclosure-mitigation frameworks.
- Bottom line: Borrowers struggling after VASP’s shutdown now have a permanent legislative framework in place, even though the exact operating details are still being finalized.
Frequently Asked Questions
What is the VA Partial Claim Program?
Did the VA Partial Claim Program replace VASP?
Do borrowers make monthly payments on the partial claim lien?
Is the VA Partial Claim Program fully live and finalized?
Executive Summary
The VA Partial Claim Program is the new statutory foreclosure-prevention tool for VA-backed borrowers, but it is not a permanent open-ended safety net under current law. It was created by the VA Home Loan Program Reform Act signed on July 30, 2025, and the statute currently allows VA to make partial claims only for five years after enactment.
Lender Insight: that date matters. A lot of commentary has called this a permanent replacement for VASP. That is not the clean read. The law created a new partial claim authority, but the statute includes a five-year termination window. As of March 2026, the program is legally established, but the detailed servicer handbook language is still moving through implementation. That means borrowers should treat the program as real, but not as fully settled in borrower-facing practice the way an older, mature loss-mitigation option would be.
What This Program Actually Does
Instead of VA buying the entire delinquent loan the way VASP did, the partial claim structure lets VA pay only the amount needed to cure or prevent the default. In exchange, VA takes a subordinate lien against the home.
What Makes This Important
This gives VA a true arrearage-parking tool that looks more like the relief structures used elsewhere in federal housing. For borrowers who can resume the regular first-mortgage payment but cannot catch up a pile of missed payments, that is a meaningful difference.
- The new program is real, but it is not permanent under current law. The statute currently stops new VA partial claims after July 30, 2030, unless Congress extends the authority.
- This option is for existing VA-backed primary-residence loans in trouble. It is not a new purchase benefit, a refinance shortcut, or a catch-all rescue for every distressed homeowner.
- The borrower does not receive cash directly. VA pays the servicer the amount needed to cure the delinquency, and VA takes a subordinate secured interest in the property.
- This is not automatic relief. The law gives VA broad discretion, and final operational details are still being formalized in updated servicing guidance.
- Borrowers still need a workable first-mortgage payment after the rescue. A partial claim can solve arrears. It cannot fix a payment that is fundamentally unaffordable going forward.
Borrower Reality Check
If your budget can no longer support the regular mortgage payment, a partial claim may not be the clean solution you hoped for. This tool is strongest when the hardship was temporary and the ongoing first-lien payment is still sustainable.
What Is The VA Partial Claim Program?
The VA Partial Claim Program is a new loss-mitigation authority that lets VA advance funds to a servicer to cure or prevent a default on a VA-backed primary-residence loan.
The law is straightforward on the core structure. The eligible loan must be VA-guaranteed, tied to the borrower’s primary residence, and either already in default or at imminent risk of default. VA then pays the holder the amount it determines is necessary to prevent or resolve the default and receives a secured interest in the property that is subordinate to the first-lien guaranteed loan.
What The Money Can Cover
The statute says the servicer must apply the partial claim amount first to arrearages. Those arrearages can include more than missed principal and interest. VA can also allow the cure amount to include items such as taxes, insurance premiums, and homeowners-association dues when those costs are part of preventing or resolving the default. This matters because a distressed file is often more than “missed payments” in the narrow sense. It is usually a full servicing problem built around the same property-cost stack borrowers see in broader cash-to-close and escrow planning.
- The partial claim is essentially an arrearage-cure tool. Its job is to move defaulted amounts out of the first mortgage so the existing loan can be brought back to a performing status.
- VA takes a subordinate lien in exchange for the advance. That means the debt does not vanish; it is moved behind the first mortgage instead of being forgiven outright.
- The legal standard is “default or imminent risk of default.” This means borrowers do not necessarily need to wait until the foreclosure process is fully underway before loss-mitigation review becomes relevant.
- The Secretary has discretion over terms and decisions. In plain language, no borrower should treat partial claim approval as automatic just because the statute now exists.
Is The Program Live Yet Or Still Being Implemented?
It is legally established, but as of March 2026 the detailed operating rules are still being formalized in VA servicing guidance.
Lender Insight: this is the key status distinction. The legal authority is no longer theoretical. Congress created it, and VA acknowledges it in current agency materials. But the handbook language that tells servicers exactly how to run the new loss-mitigation waterfall and the new partial-claim process is still moving through publication. On VA’s Drafting Table, the agency has posted draft revisions to Chapter 5 of the Servicer Handbook and a new draft Chapter 22 for the Partial Claim Program, and those drafts are now listed as previously posted and not yet published.
Why That Matters To Borrowers
It means the program exists in law, but borrowers should not assume every servicer’s front-line team is already handling it the same way. During implementation periods, the practical answer still starts with your servicer and VA loan technicians, not with internet summaries.
Is It Permanent?
No. Current law says VA may not make a partial claim under this authority after the date that is five years after enactment. Since the Act was signed on July 30, 2025, the current statutory end point is July 30, 2030 unless Congress changes it.
- As of March 2026, the program is not vaporware. The statute is enacted and VA has moved into handbook implementation.
- As of March 2026, the final handbook language is still not the same thing as fully mature field execution. Borrowers should expect some unevenness while servicer policy catches up.
- The “permanent safety net” label is inaccurate under current law. The statutory authority is currently time-limited to five years from enactment.
- Borrower strategy should be practical, not theoretical. If you are delinquent now, do not wait for perfect program finality before engaging your servicer and VA technicians.
Lender Reality Check
Implementation periods are where bad assumptions cost people the most time. The law can be in force while the servicer handbook, workflow coding, staff training, and borrower communications are still catching up.
How Does The VA Partial Claim Actually Work?
The structure is simple on paper: VA pays the servicer enough to cure the delinquency, then records a subordinate debt against the property instead of adding that amount to the current first mortgage balance.
Lender Insight: what matters here is the distinction between curing arrears and changing the affordability of the main payment. A partial claim is excellent when the borrower can afford the regular first-lien payment again but cannot absorb a lump-sum catch-up. It is much weaker when the borrower’s real problem is that the ongoing payment itself is still too high.
| Program Element | What The Law Says | What It Means In Practice |
|---|---|---|
| Eligible Loan | Must be a VA-guaranteed loan on the borrower’s primary residence that is in default or at imminent risk of default | This is a distress-relief tool for owner-occupied VA borrowers, not a general-purpose workout for every property type |
| How VA Helps | VA pays the holder an amount it determines necessary to prevent or resolve the default | The servicer gets the arrears cured and the first mortgage can move back toward performing status |
| Security | VA receives a secured interest that is subordinate to the first-lien guaranteed loan | The debt is not forgiven; it becomes a junior lien behind the main mortgage |
| General Cap | Usually up to 25% of the unpaid principal balance at the time of the partial claim | This cap controls how much delinquency can be parked behind the first mortgage |
| Special COVID-Era Cap | Up to 30% for borrowers who missed a payment between March 1, 2020 and May 1, 2025 | Some borrowers with older hardship histories may have a larger statutory ceiling |
| Arrears Covered | Can include taxes, insurance premiums, and HOA dues if VA deems them necessary to cure the default | The tool can address more than just missed principal and interest |
What The Draft Policies Add
Industry reporting on VA’s March 2026 draft handbook chapters indicates the subordinate loan would be deferred, accrue no interest, require no monthly payments, and generally become due when the first mortgage is paid off, matures, the home is sold, the loan is refinanced, or the obligation is otherwise terminated. That is the borrower-friendly design people have been waiting for, but it is still important to understand that those operating details are tied to draft implementation guidance, not just the statute itself.
- This is not a grant. The arrearage is shifted into a junior secured obligation rather than erased from existence.
- The best-case outcome is a clean first mortgage with the old delinquency parked behind it. That preserves homeownership when the missed payments were the real problem.
- The 25% and 30% caps matter. Some delinquency stacks will fit under those limits cleanly, while others may still require a different loss-mitigation path.
- If the draft terms hold, the no-interest and no-monthly-payment structure will be a major practical advantage. That keeps the rescue from immediately creating a second active monthly burden.
Deal Saver
Ask one question before you get emotionally attached to partial claim relief: if the arrears disappear tomorrow, can you comfortably make the regular monthly mortgage payment going forward? If the answer is no, you are probably solving the wrong problem.
Who May Qualify And What Could Block It?
The strongest candidates are owner-occupant VA borrowers with a temporary hardship who can resume the regular payment once the arrears are cured.
The statute gives the broad frame: primary residence, VA-guaranteed loan, and default or imminent risk of default. Beyond that, implementation guidance matters. Trade reporting on VA’s March 2026 draft policy says borrowers generally would be limited to one partial claim per loan, with a possible second claim only for hardship tied to a presidentially declared disaster. The same draft reporting says borrowers would need to complete a three-month trial payment plan before receiving the assistance.
Where Borrowers Need Caution
There is a practical difference between someone who fell behind due to a temporary shock and someone whose payment remains unaffordable because income permanently dropped or expenses permanently rose. Partial claim is better at solving the first case than the second. If the problem is no longer just arrears but a full budget failure, you are already closer to the risks discussed in VA loan after foreclosure territory than most borrowers realize.
- Primary residence status is central. The new statutory program is tied to owner-occupied VA-backed loans, not second homes or pure investment property workouts.
- Temporary hardship is the cleanest fit. If income has stabilized and the borrower can resume the normal payment, partial claim becomes much more viable.
- A trial-payment requirement would be a serious operational gate if finalized. That would force borrowers to prove they can sustain the ongoing payment before the junior lien is created.
- Repeat use may be limited. Current draft reporting points toward one partial claim per loan in most cases, with disaster-related exceptions.
- Borrowers should not assume all missed-payment situations fit under the cap. A very large arrearage or an ongoing affordability collapse may still push the file toward another workout or exit strategy.
Approval Watchpoint
Even if you are a strong factual fit, the law makes partial-claim decisions discretionary. That means the existence of hardship is not enough by itself. The servicer and VA still need a file that fits the program rules and the evolving waterfall.
How Is The VA Partial Claim Different From VASP?
VASP and partial claim solve distress in very different ways. VASP involved VA purchasing the delinquent loan from the servicer. Partial claim leaves the existing first mortgage in place and moves only the arrears into a subordinate VA-held debt.
Lender Insight: that distinction matters because VASP was a whole-loan intervention. Partial claim is a targeted arrearage intervention. For many borrowers, that is a cleaner and more durable design because it avoids replacing the first loan altogether while still removing the immediate default pressure.
| Topic | VASP | VA Partial Claim |
|---|---|---|
| Basic Structure | VA purchased the delinquent loan from the servicer | VA advances only the amount needed to cure the delinquency and takes a junior lien |
| Current Status | Closed to new submissions as of May 1, 2025 | Created by statute on July 30, 2025 and still being implemented through updated servicing guidance |
| Borrower Problem Best Solved | Broad restructuring through VA purchase | Temporary hardship where the borrower can resume the regular payment after arrears are parked |
| First Mortgage | Replaced through VA servicing purchase structure | Remains in place, with the cured delinquency moved to a subordinate obligation |
| Main Practical Advantage | Deep intervention at the whole-loan level | Potentially cleaner long-term structure for borrowers who only need arrearage relief |
Why This Matters To Borrowers Now
If you missed the VASP window, you cannot revive it through a late application. Official VA materials are clear that new VASP submissions ended on May 1, 2025. The current path forward is whatever your servicer can offer under the live loss-mitigation menu today, with the new partial claim authority layered in as implementation matures.
- VASP is closed to new entrants. Borrowers should stop treating it like an option that can be reopened by persistence or escalation.
- Partial claim is not just “VASP with a new name.” The architecture is different, the borrower impact is different, and the arrearage treatment is different.
- The new program is likely to feel more familiar to the broader mortgage market. Parking delinquency behind the first lien is a more recognizable federal housing relief structure.
- Because VASP ended before the new program was fully matured, the transition period matters. Borrowers need to work the options their servicer can actually execute today.
Temporary Setback
- The borrower fell behind because of a temporary shock but can now handle the standard mortgage payment if the arrears are moved out of the way.
Mixed Hardship
- The borrower may be recovering, but current income, taxes, insurance, or HOA costs still leave the monthly budget tighter than it looks at first glance.
Ongoing Affordability Failure
- The borrower still cannot sustain the regular mortgage payment, meaning curing arrears alone would not stop the file from falling right back into distress.
What Should Struggling VA Homeowners Do Right Now?
Do not wait for a perfect headline summary. Contact your servicer immediately, ask what live VA loss-mitigation options are currently available on your specific loan, and involve a VA loan technician early.
Lender Insight: timing is the operational lever here. Borrowers who wait for a final polished handbook chapter often arrive later, deeper in default, and with fewer clean options. The best move is to work the real file now while keeping situational awareness on how the partial-claim rollout develops.
- Call your mortgage servicer now. Ask what VA-backed loss-mitigation options are active on your specific loan today, not what someone on social media says should exist in theory.
- Contact VA loan technicians early. VA’s foreclosure-help team can help you understand your path and step in if servicing communication is breaking down.
- Prepare a clean hardship file. Document the cause of delinquency, current income, current expenses, and whether you can resume the normal payment if arrears are cured.
- Ask targeted questions about partial claim readiness. Find out whether your servicer is already preparing for the new option, whether a trial plan may be required, and what would block your file.
- Do not ignore the second-lien consequences. If partial claim is offered, ask exactly when the subordinate debt comes due, how it affects future refinancing or sale, and what happens if you default again later. If that later-default risk matters to you, you should also understand how a loss can affect future entitlement.
Closing Risk
Borrowers often focus only on avoiding foreclosure this month. That is necessary, but not sufficient. You also need to understand what obligation survives behind the first mortgage and how that affects your next refinance, sale, or future VA entitlement strategy.
The Bottom Line
The VA Partial Claim Program is the new statutory loss-mitigation tool for distressed VA-backed primary-residence loans, but it is not a permanent open-ended program under current law. It is currently authorized for five years from July 30, 2025, and as of March 2026 the legal authority is in place while the detailed servicing guidance is still being finalized.
Lender Insight: the clean read is this. VASP is over for new submissions. Partial claim is the new direction. For the right borrower, it could become the most practical VA foreclosure-prevention tool in years because it targets arrears without replacing the entire first mortgage. But it is still a debt, still a lien, still subject to discretion, and still best suited for borrowers who can resume the regular monthly payment once the default is cured.
- Do not call this a permanent safety net. The current statute ends new partial claims after July 30, 2030 unless Congress extends the authority.
- Do not confuse legal creation with full field maturity. As of March 2026, handbook implementation is still being finalized.
- Do not assume partial claim erases debt. It cures default by creating a subordinate obligation, not by making the arrears vanish.
- Use it for the right problem. This tool works best when missed payments are the issue and the ongoing first-mortgage payment is still affordable.
Frequently Asked Questions
Is The VA Partial Claim Program Permanent?
No. Under current law, VA may not make new partial claims after July 30, 2030 unless Congress extends the program or changes the statute.
Did The VA Partial Claim Program Replace VASP?
It replaced VASP as the new statutory direction for foreclosure relief, but it is not the same structure. VASP involved VA purchasing the loan. Partial claim cures arrears and creates a subordinate lien.
Can A Borrower Apply Directly To VA For A Partial Claim?
Not in the usual consumer sense. The process runs through the mortgage servicer, with VA oversight and guidance. Borrowers should work with both the servicer and VA loan technicians.
What Kind Of Loan Can Qualify?
The law applies to VA-guaranteed loans tied to the borrower’s primary residence that are in default or at imminent risk of default.
How Much Can VA Advance Under A Partial Claim?
Generally up to 25% of the unpaid principal balance at the time of the claim, or up to 30% for certain borrowers who missed payments during the March 1, 2020 to May 1, 2025 period.
Does The Partial Claim Cover More Than Missed Principal And Interest?
Yes. The statute allows arrearages to include items like taxes, insurance premiums, and homeowners-association dues when VA determines those amounts are necessary to prevent or resolve default.
Will The Partial Claim Add A Second Monthly Payment?
Current draft-policy reporting says the subordinate obligation would accrue no interest and require no monthly payment, but borrowers should confirm the final implemented terms with their servicer.
Is A Trial Payment Plan Required?
Current March 2026 draft-policy reporting says a three-month trial payment plan would be required, but borrowers should treat that as draft implementation guidance until final handbook language is published.
Can You Use More Than One Partial Claim On The Same Loan?
The statute generally allows only one partial claim per loan, though it permits an additional claim in certain presidentially declared disaster situations.
What If The Borrower Defaults Again After Receiving A Partial Claim?
The law allows VA to recover losses suffered after a later default, and VA may reduce the borrower’s available home-loan entitlement if the loss ultimately affects the government.
Resources Used
- Public Law 119-31, VA Home Loan Program Reform Act: statutory text establishing the Partial Claim Program, caps, disaster exception, and five-year termination
- VA Home Loans Drafting Table: current status of draft Chapter 5 and draft Chapter 22 implementation materials for the Partial Claim Program
- VA help to avoid foreclosure: current borrower guidance and confirmation that VASP closed to new submissions
- VA VASP program FAQ: official explanation of the VASP wind-down and May 1, 2025 end of new submissions
- VA Circular 26-25-02: official VASP Program Wind Down guidance
- VA Home Loans legislative history page: agency summary of the 2025 law creating new loss-mitigation options including the Partial Claim Program
- VA FY 2025 Agency Financial Report: agency confirmation that the law signed on July 30, 2025 established the Partial Claim Program
- ABA Banking Journal summary of VA’s March 2026 draft policy details, including reported trial-payment and deferred-loan features
Matt Schwartz is a nationally ranked mortgage professional and licensed Mortgage Loan Originator at Southlake Mortgage (NMLS ID 151017). He is ranked #18 nationally in VA loan volume, #13 nationally for FHA, and #67 overall in total units closed. Matt focuses on VA and FHA purchase lending, qualification strategy, and complex borrower scenarios, helping Veterans make clear, accurate mortgage decisions.
