The Department of Veterans Affairs has introduced significant changes to its loss mitigation framework, creating new operational requirements for servicers and new considerations for borrowers.
In this episode of The Subservicing Scene, Richey May’s Mignonne Davis and Jenifer Hughes break down the VA Home Loan Program Reform Act and the new VA Loss Mitigation Waterfall that servicers will be required to implement. The legislation created a new VA Partial Claim program to replace the previous VASP program and established a mandatory sequence of loss mitigation options for eligible borrowers.
The discussion highlights several important changes, including:
- The introduction of a VA Partial Claim structure that allows the VA to purchase a portion of a defaulted loan balance under specific circumstances.
- New requirements around Trial Payment Periods (TPPs), which are now required for all modification types within the waterfall and for VA Partial Claims.
- Updated borrower eligibility and timing restrictions that may impact future modification or refinance opportunities.
- A structured decision-making framework requiring servicers to follow a prescribed order when evaluating loss mitigation options.
The implementation deadline is rapidly approaching and operational readiness efforts should already be underway. Servicers will be required to implement both the VA Partial Claim program and the new VA Loss Mitigation Waterfall by November 28, 2026.
For mortgage executives, servicing leaders, compliance teams, and subservicing oversight professionals, understanding these changes is critical. The new requirements will affect borrower communications, loss mitigation workflows, documentation processes, and compliance expectations.
Watch the full video for a practical discussion of the program changes, key implementation requirements, important timelines, and the operational impacts servicers should be evaluating today.
The VA put on several training webinars this month. Their training resources can be found here.
