The U.S. Senate recently passed H.R. 1815, the VA Home Loan Program Reform Act, to reauthorize partial claims with U.S. Department of Veterans Affairs (VA) guaranteed home loans. The U.S. House of Representatives passed the legislation in May 2025, and the legislation now moves to President Trump for his signature.
With the sunset of a prior VA home loan partial claim program, and the more recent wind down of the Veterans Affairs Servicing Purchase (VASP) program, the enactment of the legislation is welcome news to the mortgage industry. In a press statement, the Mortgage Bankers Association's President and CEO Bob Broeksmit said that the "MBA applauds the Senate for taking swift bipartisan action to support veterans at risk of foreclosure by passing the VA Home Loan Program Reform Act. This important legislation, which passed the House in May, is a critical step forward in ensuring that distressed veteran homeowners have access to a proven and sustainable loss mitigation solution."
The legislation provides for the purchase by the VA of a portion of indebtedness under a VA home loan secured by the primary residence of the borrower that is in default or in imminent risk of default. The VA would pay to the holder of the loan the amount of indebtedness that the VA determines necessary to help prevent or resolve a default, and the VA would receive a non-interest bearing secured interest in the home that is subordinate to the first lien VA guaranteed loan. The partial claim amount would be limited to 25% of the unpaid principal balance of the loan on the date on which the partial claim is made. However, in the case of an individual who failed to make a payment on a loan during the period beginning on March 1, 2020 and ending on May 1, 2025, the amount of a partial claim would be limited to 30% of the unpaid principal balance of the loan as of the date that the initial partial claim is made.
The legislation allows for one partial claim per loan, although an additional partial claim would be allowed in the case of an individual who failed to make a payment on the loan during a major disaster declared by the President.
A partial claim will not reduce the amount of the VA guarantee on the loan.
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