A new law signed by President Donald Trump on July 30 will establish a new partial claims program designed to help veterans who fall behind on their mortgage payments avoid foreclosure.
The bipartisan VA Home Loan Program Reform Act grants the Department of Veterans Affairs expanded authority to pay loan holders the necessary amounts to prevent foreclosures on Veterans Affairs-backed home loans.
The bill also boosts funding for programs aimed at preventing veteran homelessness.
At the bill signing ceremony, Trump highlighted the legislation’s broad, bipartisan support in Congress and described it as “common sense legislation.”
Here’s what to know about the new law, which could benefit 3.7 million veterans while directly helping as many as 61,000 veterans currently at risk of losing their homes.
New Partial Claims Program
The new law establishes a five-year partial claims program under the VA Home Loan Program.
This program allows the Department of Veterans Affairs to pay part of a veteran’s overdue mortgage payments directly to lenders, bringing the loan current while deferring repayment until later.
Veterans will repay the deferred amounts when they refinance, sell their home, or pay off their mortgage.
Unlike the Veterans Affairs Servicing Purchase Program created in 2024, the partial claims program does not involve the Department of Veterans Affairs purchasing delinquent loans outright.
The purchase program allowed the VA to buy loans, adjust their terms, and offer veterans a fixed 2.5 percent interest rate.
However, the Trump administration ended that in May 2025 amid concerns that it was established without congressional input and could risk the stability of the VA loan guarantee program.
The new partial claims program is intended as a last-resort option after other loss mitigation steps have been exhausted.
It applies only to primary residences and limits the amount the Department of Veterans Affairs can pay to a percentage of the unpaid principal balance.
In addition, the law mandates a specific loss mitigation sequence that mortgage servicers must follow before foreclosing or transferring a loan to the VA.
This aims to standardize foreclosure prevention efforts and provide veterans with consistent opportunities to avoid losing their homes.
Bipartisan Support
The bill received widespread support from lawmakers on both sides of the aisle.
The House passed its version of the legislation in May 2025, followed by Senate approval in July.
It then proceeded to Trump’s desk for signature.
In a joint statement, House and Senate Veterans’ Affairs Committee leaders praised the bill’s potential to help veterans facing financial hardships stay in their homes.
They described the VA Home Loan Program as one of the most valuable benefits offered to veterans since its creation in 1944.
Implementation and Impact
The legislation also increases funding for the VA Grant and Per Diem program, which supports community agencies that provide transitional housing and services to veterans experiencing homelessness.
The funding is raised to $344 million annually for 2025 and 2026, and $257.7 million annually through 2030.
Mortgage industry groups and veterans’ organizations endorsed the bill as a necessary update to modernize VA foreclosure prevention efforts and fill the gap left by the termination of Veterans Affairs Servicing Purchases.
Following the law’s enactment, under the provisions of the bill, the Department of Veterans Affairs will develop regulations to implement the partial claims program and coordinate with mortgage servicers.
The law aligns the VA’s foreclosure prevention tools more closely with those used by other federal housing programs, such as the Federal Housing Administration and the U.S. Department of Agriculture, which have offered similar partial claim options for years.
