VA loans have the strongest loss-mitigation protections of any common loan type. If you're facing foreclosure on a VA loan, your servicer is required to evaluate you for the options on the VA Loss Mitigation Waterfall — including repayment plans, special forbearance, the new VA Partial Claim (live since June 15, 2026), and a VA loan modification — plus compromise sale (VA short sale with deficiency waiver), and VA deed in lieu — before proceeding to foreclosure. Service members on active duty also get SCRA protections including rate caps and foreclosure moratoriums. Call the VA Regional Loan Center at 1-800-827-3702 first.
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VA loans come with stronger loss-mitigation protections than any other common loan type. The U.S. Department of Veterans Affairs — through its Regional Loan Centers — actively monitors servicer behavior on VA-guaranteed loans and has direct intervention authority when servicers fail to exhaust loss mitigation before foreclosure.
For service members and veterans, the Servicemembers Civil Relief Act (SCRA) adds another layer: interest rate caps at 6%, foreclosure moratoriums during active service, and mandatory court approval of any foreclosure during covered service periods.
2026 update: VA Servicing Purchase (VASP) closed in May 2025 and is no longer available. Its replacement is the VA Partial Claim, which VA opened on June 15, 2026. Servicers must offer it through the VA Loss Mitigation Waterfall by November 28, 2026 — some are still building their systems, so ask directly.
The VA pays your servicer to bring the loan current — covering missed principal and interest and, where applicable, past-due taxes, insurance and HOA dues — up to 25% of your unpaid principal balance (30% in some COVID-era cases). You first complete a three-month trial payment plan. The amount becomes a zero-interest second lien to the VA with nothing due monthly; it is repaid when you sell, refinance or pay off the loan. It is not forgiven.
If a partial claim alone doesn't make the payment affordable, the waterfall moves to a modification that can extend the term (up to 40 years) and adjust the rate. Your servicer must work through the VA waterfall in order before foreclosure can proceed.
Spreads past-due amounts across 6–12 months on top of normal payments. Best for short-term hardships with stable current income.
Formal forbearance for 3–12 months in documented hardship cases. VA rules require servicers to offer forbearance in most military relocation and deployment cases.
If you owe more than the home is worth, the VA can approve a sale for less than the full balance. Critically, the VA typically grants a deficiency waiver on compromise sales, meaning the remaining balance is forgiven.
Voluntary title transfer to the lender with VA approval, released from the mortgage. Relocation assistance is frequently included.
Before calling your servicer: call the VA Regional Loan Center first. The VA can escalate directly with the servicer and ensure VA-specific loss mitigation is being properly evaluated — which doesn't always happen automatically.
If you're on active duty or within 12 months of leaving service, the SCRA provides significant protections:
SCRA protections must be invoked — servicers do not apply them automatically. Submit your military orders to your servicer in writing.
1. Servicer defaults to non-VA programs. VA loan servicers sometimes evaluate for Fannie Mae Flex Modification first. Explicitly request evaluation under the VA Loss Mitigation Waterfall, including the VA Partial Claim.
2. “We don't offer that yet.” Servicers have until November 28, 2026 to fully roll out the VA Partial Claim. If yours says it isn't available, ask for that in writing, ask whether a foreclosure hold applies while they implement it, and call the VA Regional Loan Center.
3. SCRA not applied automatically. Active-duty status must be formally invoked with written documentation. Don't assume the servicer has it.
4. Compromise sale deficiency confusion. Confirm in writing whether the deficiency is waived. Even though waiver is standard, get it in the approval letter.
Call the VA Regional Loan Center at 1-800-827-3702. The VA can escalate directly with your servicer and ensure VA-specific loss mitigation is properly evaluated. This is often faster than calling your servicer directly.
No. VA Servicing Purchase (VASP) closed in May 2025. It was replaced by the VA Partial Claim, which opened June 15, 2026. Servicers must offer it through the VA Loss Mitigation Waterfall by November 28, 2026.
After a three-month trial payment plan, the VA pays your servicer to cure the arrears, up to 25% of your unpaid principal balance (30% in some COVID-era cases). You owe that amount as a zero-interest second lien with no monthly payment, due when you sell, refinance or pay off the loan.
Yes, if you're on active duty or within 12 months of leaving service. The SCRA provides a foreclosure moratorium during service and requires court approval for any foreclosure. You must invoke SCRA in writing with your military orders.
Repayment plans, special forbearance, the VA Partial Claim (new in 2026) and a VA loan modification, offered in order through the VA Loss Mitigation Waterfall. Your servicer is required to evaluate VA-specific options before foreclosure.
Typically 2 years. Your entitlement may be partially reduced until you repay the difference the VA paid on the claim. Contact the VA Regional Loan Center to discuss entitlement restoration.
Rarely. The VA typically waives the deficiency on compromise sales and deed in lieu. On completed foreclosures, the VA may pay the claim and then seek recovery from the veteran under specific circumstances, though this is uncommon.
Yes, completely free. It's a VA function, not a private service. They provide escalation support, mediation between you and your servicer, and can authorize VA-specific loss mitigation options.
Yes, typically 2 years after the foreclosure is completed. Your VA entitlement may need to be restored, which can require repaying the VA any claim it paid to your lender.
Former bank loss mitigation managers — we know how decisions get made inside servicers because we used to make them.
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