PennyMac First Large Servicer to Offer VA Partial Claim

PennyMac Financial Services announced on Thursday that it has become the first large mortgage servicer to implement the U.S. Department of Veterans Affairs' (VA) new loss-mitigation waterfall, which includes the VA Partial Claim option. This implementation occurred nearly four months ahead of the VA's November 28 deadline for this change. The rollout follows the VA's recent finalization of updates to its loss-mitigation and partial-claim policies, which incorporate provisions from the 2025 VA Home Loan Program Reform Act. This legislation established a permanent partial claim option, addressing a gap left by the wind-down of the Veterans Affairs Servicing Purchase (VASP) program, which had previously served as a long-term foreclosure prevention alternative for borrowers facing financial difficulties. Under the new VA Partial Claim program, eligible borrowers with VA-backed mortgages can have a portion of their missed mortgage payments covered by the VA. This coverage aims to bring their loans current. The amount covered is generally capped at 25% of the unpaid principal balance and is structured as a subordinate lien. This subordinate lien does not require monthly payments and is repaid only when the home is sold, refinanced, or otherwise paid off. The updated loss-mitigation waterfall also mandates that servicers evaluate borrowers through a standardized sequence of foreclosure prevention options before initiating foreclosure proceedings. To be eligible for the new partial claim option, borrowers must have recovered from a financial hardship and successfully completed a three-month trial payment plan. PennyMac stated that borrowers with VA loans serviced by the company who are currently experiencing financial hardship can now be assessed under this new waterfall. The company attributed its ability to implement these changes early to its proprietary servicing platform, Plaisse, which it claims facilitates the rapid integration of regulatory updates. Mark Acosta, PennyMac's chief servicing officer, commented in a statement that being the first large servicer to launch this loss mitigation waterfall demonstrates the robustness of Plaisse and the expertise of the team responsible for its development and operation. He further noted that the company developed and owns its servicing platform, highlighting its control over implementation.