The U.S. Senate passed a partial claims bill aimed at helping Department of Veterans Affairs borrowers avoid foreclosure following the expiration of a previous federal servicing program this past spring.
Senators approved the VA Home Loan Program Reform Act by unanimous consent Tuesday evening after the House of Representatives previously proposed and passed the legislation this spring on a bipartisan basis. The bill now heads to President Trump to be signed into law.
The new bill will align servicing guidelines for VA borrowers in danger of losing their homes with foreclosure assistance measures available in other government-backed mortgage programs. The amount of a partial claim would not exceed 25% per terms of the bill, or 30% if a missed payment occurred during a five-year period between 2020 and 2025.
Republican and Democratic leaders of both House and Senate Committees on Veterans’ Affairs who worked on the bill issued a statement in support of the bill following passage. The House committee is chaired by Rep. Mike Bost, R-Ill., Rep. Derek Takano, D-Calif. as its ranking member. The same roles in the Senate are held by Sens. Jerry Moran, R-Kan. and Richard Blumenthal, D-Conn.
“Today, we are empowering VA to establish a partial claim program as an option of last-resort, which will preserve veteran homeownership and save taxpayer dollars by avoiding preventable foreclosures,” they said.
“We encourage the VA and mortgage servicers to continue their collaboration as this program is implemented, ensuring that they help mitigate any impact on veterans facing financial hardship while VA takes the necessary steps to establish the new partial-claims program properly.”
The committee leaders also said they planned to build upon the legislation to include additional loss-mitigation assistance as offered by other government agencies. “No veteran should fall through the cracks or risk losing their home while a last-resort program is being implemented,” they added.
Alongside the partial-claims provisions, the bill includes funding for the VA grant and per diem program aimed at homelessness prevention among former servicemembers, with proceeds going to community agencies.
Industry reaction to the passage of the VA bill
Mortgage industry leaders had actively pushed Congress to come up with a new loss-mitigation solution after the termination of the Veterans Administration Servicing Program this year. The post-pandemic program, which ran for a little less than 12 months, had included a temporary foreclosure moratorium, which expired at the end of 2024.
“MBA applauds the Senate for taking swift bipartisan action to support veterans at risk of foreclosure,” said Mortgage Bankers Association President and CEO Bob Broeksmit following the Senate announcement.
“Since the VA’s previous partial claim authority was sunset without a replacement nearly two years ago, MBA has worked closely with the VA, lawmakers and our members to advocate for a permanent partia- claim option that mirrors the successful programs offered by other federal housing agencies,'” he added.
In addition to the mortgage industry, advocates for military homeowners had pressured Congress to come up with new veterans’ loss-prevention solution following the termination of VASP this past May. Many had called for a reintroduction of a foreclosure moratorium until a plan was established.
“Given that the current administration decided to not continue the VA Servicing Purchase Program, a strengthened partial indemnification program makes sense here,” said Community Home Lenders of America’s external affairs consultant Rob Zimmer in a statement where he also commended Congress for its vote.
Following the expiration of the previous VASP moratorium, housing research showed a noticeable spike in foreclosure numbers, with new fillings associated with VA mortgages seeing their largest volumes in years.
