The Department of Veterans Affairs (VA) finalized updates to its loss mitigation and partial claim policies Monday, offering a new option in its loss mitigation waterfall which it says will provide alternatives to foreclosure and help keep veterans in their homes.

Industry groups are praising the updates, which eliminated a step in the initial proposed partial claim. Text of the previous draft would have allowed loan modifications to increase borrowers’ monthly payments by up to 15%.

The VA’s updates come because of the bipartisan 2025 VA Home Loan Program Reform Act, which was designed to protect veterans who were experiencing financial hardships. Partial claims are measures set up by the VA to help veterans bring their delinquent VA-backed mortgages current. The waterfall is the step-by-step process servicers use to help borrowers avoid foreclosure.

Rob Zimmer, head of external affairs for the Community Home Lenders of America (CHLA), told Scotsman Guide that his organization — which had fought against the 15% proposal — “is pleased this partial claim program mandated by Congress can hit the market soon.”

In an email shared with Scotsman Guide, the VA stated the partial claim policy was updated based on feedback received from the mortgage industry, Veterans Service Organizations and veterans.

“We are deeply grateful to the VA for removing from the final guidance the proposed 15% increase in monthly payments parameter (for a partial claim option), something we asked for in our March 2026 letter to the VA,” Zimmer said. “This change does make a material difference for veterans and active-duty families needing help staying in their homes, help that will not increase taxpayer exposure.”

The Mortgage Bankers Association (MBA) also praised the VA’s release of its partial claim program and updated loss mitigation waterfall in an email sent to Scotsman Guide.

Bob Broeksmit, the MBA’s president and CEO, pointed to the “collaborative stakeholder feedback process that helped strengthen the proposed policies.”

The group had long supported legislation to assist veterans at risk of foreclosure.

“We are pleased to see that veteran homeowners will have access to a key loss mitigation option available to other borrowers with government-backed mortgages, that can allow veterans to remain in their homes without increasing their monthly payments,” Broeksmit stated.

“After actively engaging in the legislative and policy efforts behind this important change, we will continue working with the VA and our servicer members to support implementation,” Broeksmit added. “Activating this new loss mitigation option will require servicers to update systems, modify processes and train staff, and we appreciate the VA’s recognition of these implementation challenges by providing a 180-day timeframe.”

According to the VA, mortgage servicers will be able to submit trial payment plans for loan modifications and partial claims beginning June 15. Servicers will have until Nov. 28 to update their systems’ functionality to accommodate the new partial claim program.