Short answer: A New Jersey homeowner with a VA-guaranteed mortgage may now be evaluated under a mandatory VA loss-mitigation sequence that includes a new VA Partial Claim option. The program took effect on June 15, 2026, and the VA says servicers must complete implementation no later than November 28, 2026. A partial claim is not automatic, is not debt forgiveness, and does not replace New Jersey court deadlines. It can, however, move eligible arrears into a separate obligation owed to the VA and help bring the first mortgage current.
What changed for VA borrowers in 2026?
The VA Home Loan Program Reform Act, signed on July 30, 2025, directed the Department of Veterans Affairs to create a mandatory sequence of loss-mitigation options and a new Partial Claim Program. The VA reports that the waterfall and partial-claim program became effective on June 15, 2026. Its October 1, 2026 implementation notice states that servicers must fully implement them by November 28, 2026.
This is a material change from the period when the Veterans Affairs Servicing Purchase program was winding down and VA borrowers had fewer tools for resolving a delinquency without a large payment increase. The change does not mean every veteran qualifies for a partial claim. It means the servicer must use the VA’s prescribed review sequence and document the result.
The VA’s current homeowner guidance lists several potential retention options, including special forbearance, a repayment plan, traditional modification, a 30-year modification, a VA partial claim, and a 40-year modification. The appropriate result depends on the loan, the default, the borrower’s present ability to pay, and the governing VA criteria.
How the VA loss-mitigation waterfall works
A “waterfall” is a required sequence for testing available solutions. It is not a promise that the homeowner will receive each option or may choose any term. The servicer moves through the governing criteria and identifies the first available result that fits the loan and the borrower’s circumstances.
That distinction matters. A borrower may prefer a partial claim because it can separate arrears from the first-mortgage balance, while the waterfall may direct the servicer to a repayment plan or modification first. The VA’s servicer FAQs state that a partial claim may be offered only when the waterfall directs the servicer to that option.
Homeowners should request the decision in writing and keep the documents used in the review. If the servicer says an option is unavailable, ask which eligibility requirement was not met and what data supported that conclusion. A phone representative’s description is not a substitute for the written offer, denial, or account history.
What is a VA partial claim?
A partial claim allows the VA to advance funds on the borrower’s behalf to address an eligible delinquency. In exchange, the borrower and applicable co-borrowers execute a separate note and security instrument in favor of the Secretary of Veterans Affairs. The first mortgage is reinstated if the transaction is completed correctly, while the new VA obligation remains secured by the property.
The balance is therefore deferred, not erased. The borrower should review when the partial-claim debt becomes payable, whether it is due at payoff, sale, transfer, or another stated event, and how it will appear in a future title or refinance review.
38 U.S.C. § 3737 authorizes a partial claim of up to 30% of the unpaid principal balance for the statutory pandemic-period category and up to 25% in other cases. The statute generally limits a loan to one partial claim, subject to a separate disaster-related exception. The VA’s current FAQs also explain that a prior paid partial claim under certain COVID-era programs may affect eligibility.
The VA homeowner page states that the new option requires a three-month trial payment plan. Finishing the trial is important, but it is not the last administrative step. The final documents, servicer reporting, VA payment request, and first-mortgage reinstatement should all be confirmed.
The November 28 implementation deadline
VA says servicers have until November 28, 2026, to complete system implementation. During this transition, a homeowner may hear that the servicer is not yet ready to offer the new partial claim. That response should be documented and compared with the VA’s published implementation guidance.
The implementation period does not create an automatic moratorium on a New Jersey foreclosure. It also does not authorize a homeowner to ignore a complaint, motion, mediation deadline, or sheriff’s-sale date. The safer approach is to pursue the VA review while separately protecting rights in the court case.
VA rules, federal servicing law, and New Jersey law operate together
A VA-guaranteed loan can be governed by several layers of law at the same time:
- The VA statute, servicing handbook, waterfall, and program guidance;
- Federal mortgage-servicing requirements, including Regulation X, 12 C.F.R. § 1024.41, when applicable;
- The mortgage and note; and
- New Jersey’s Fair Foreclosure Act and court rules.
For example, New Jersey ordinarily requires a compliant Notice of Intention at least 30 days before a residential foreclosure action. Federal law generally restricts the first foreclosure filing until a borrower is more than 120 days delinquent. A timely complete loss-mitigation application can create additional protections. These rules may overlap; they should not simply be added together as if they create one guaranteed waiting period.
Our guides to the 120-day rule and the New Jersey Notice of Intention explain those separate clocks.
A practical VA-servicing audit
Gather the following before challenging or accepting a decision:
- The note, mortgage, most recent statement, and proof the loan is VA-guaranteed;
- The complete payment history and escrow analysis;
- Every loss-mitigation application, upload confirmation, and missing-document notice;
- The written waterfall result, denial reason, and any offered trial plan;
- The proposed partial-claim note and security instrument;
- The Notice of Intention, foreclosure complaint, court notices, and any sale notice; and
- A dated log of calls with the servicer and the assigned VA loan technician.
VA states that a loan technician is automatically assigned when a VA-guaranteed loan becomes 61 days past due. A homeowner may also contact the VA directly. That assistance can be valuable, but it does not replace legal review of the foreclosure case or the proposed documents.
Example: the servicer says the program is not ready
Assume a veteran is five months delinquent and has a pending New Jersey foreclosure. The servicer says its system will not support a VA partial claim until late November. The veteran can request a written waterfall review, preserve the servicer’s statement, contact the VA loan technician, submit any required financial information, and ask what interim option is being considered. At the same time, the veteran must respond to the foreclosure pleadings and monitor any motion or sale date.
The point is not that a partial claim must be granted. The point is to create a reliable record showing what the servicer reviewed, which criteria it applied, and whether the pending court activity was coordinated with the loss-mitigation process.
Frequently asked questions
Does a VA partial claim forgive the missed payments?
No. It generally moves eligible amounts into a separate obligation owed to the VA and secured by the property. Review the repayment triggers before signing.
Can I demand a partial claim instead of a modification?
Not necessarily. The VA requires the servicer to use its waterfall. Eligibility and sequencing determine which option may be offered.
What if I already had a COVID-era VA partial claim?
Prior partial-claim assistance can affect eligibility. The VA’s current servicer FAQs state that certain previously paid partial claims disqualify the same loan from the new program. The loan history should be reviewed before drawing a conclusion.
Does applying stop my New Jersey foreclosure?
Not automatically. Federal servicing protections may restrict certain foreclosure steps when a qualifying application is timely and complete, but court deadlines remain active unless the case is stayed, adjourned, or otherwise controlled by a binding rule, order, or agreement.
What if the waterfall calculation appears wrong?
Request the written decision and the inputs supporting it. Compare the delinquency, unpaid principal balance, prior assistance, income, expenses, and trial-plan history with the governing guidance. Our loan-modification denial guide identifies additional records to preserve.
Review the VA file and the foreclosure docket together
A VA review can create a real path to reinstatement, but timing and documentation matter. Fazzio Law Offices can review the loss-mitigation record, the proposed partial-claim documents, and the New Jersey foreclosure docket together. Bring the items listed above so the review starts with the actual numbers and deadlines.
Attorney-review note: Whether a particular VA servicing failure supports an affirmative defense, stay, dismissal, damages claim, or other remedy depends on the governing documents, procedural posture, applicable law, and provable prejudice. No automatic result should be stated without reviewing the file.
Attorney advertising. This article provides general educational information, not legal advice or a guarantee of eligibility or outcome. VA and servicer requirements can change, and individual loan documents and court orders control. Sources reviewed November 2, 2026.
