Navigation A New Safety Net for VA Borrowers: Inside the 2025 Partial-Claim Law
On July 30, 2025, the VA Home Loan Program Reform Act (H.R. 1815) became law, creating a statutory Partial Claim under 38 U.S.C. § 3737 to help Veterans keep their homes. In practical terms, when a Veteran’s VA-backed mortgage on their primary residence is in default or at imminent risk, the VA can advance funds to cover what they owe and take a small junior lien behind their first mortgage, bringing you current without changing your existing loan, interest rate, or servicer. This targeted reset is designed to stop the slide toward foreclosure so you can resume regular payments and stabilize your household.
The relief is sizable but disciplined. The VA may advance up to 25% of a Veteran’s unpaid principal balance as of the claim date, or up to 30% if you missed any payment between March 1, 2020 and May 1, 2025 due to pandemic-era hardship, with funds applied first to arrearages, including escrow items like property taxes, homeowners insurance, and HOA dues. Generally, there is one Partial Claim per loan, with a narrow second allowed if the delinquency aligns with a Presidentially declared major disaster (or the 120 days after). The VA will audit post-payment files to enforce compliance, and if a later default occurs, the VA can recover losses, reduce remaining entitlement, and, if necessary, foreclose its junior lien under state procedures; decisions on § 3737 relief rest in the VA’s discretion.
Just as important, the Act requires a VA-set loss-mitigation “waterfall” that servicers must follow, ensuring you’re evaluated for options (including the Partial Claim) before anyone discusses the VA purchasing the whole loan or moving toward foreclosure. This reform arrives as the VA’s emergency Veterans Affairs Servicing Purchase (VASP) stopped accepting new submissions on May 1, 2025, and the Partial Claim fills that gap. The authority to make new Partial Claims sunsets five years after enactment (through July 30, 2030), so if a Veteran is behind or worried they might be, they can contact their servicer and ask for a full VA loss-mitigation evaluation that includes the Partial Claim.
