If you’ve been feeling the weight of a mortgage payment that has fallen behind, I want you to take a deep breath. You aren’t alone, and more importantly, you aren’t out of options. For many veterans and military families, the last couple of years have been a bit of a rollercoaster. Between inflation and the general cost of living, it’s easy for things to get off track.
Up until recently, if you fell behind on your VA loan, the options weren’t always great. Often, you were looking at a "loan modification" that would roll your past-due balance into a new loan. The problem? That new loan would come with today’s interest rates: which are significantly higher than the record-low rates many of us locked in back in 2020 or 2021.
But things just changed for the better. Thanks to the 2025 VA Home Loan Program Reform Act, there is a brand-new lifeline called the Partial Claim program. It’s a tool designed specifically to keep you in your home without stripping away that low interest rate you worked so hard to get.
At Operation T.A.G. (Tangible Act of Gratitude), we believe that keeping veterans in their homes is one of the highest forms of gratitude we can show. Let’s break down exactly how this new program works and how it can help you breathe a little easier.
The Interest Rate Trap: Why This Matters
To understand why this new program is such a big deal, you have to look at the "Interest Rate Trap." Imagine you bought or refinanced your home a few years ago and landed a 2.5% or 3% interest rate. That’s an incredible asset. But then, life happened: maybe a medical emergency, a job change, or a tough PCS move: and you missed a few payments.
In the past, to "fix" that delinquency, your servicer might offer to modify the loan. They’d take what you owe and wrap it into a new 30-year mortgage. However, they’d have to use current market rates, which might be 6% or 7%. Even though your past-due balance is caught up, your monthly payment might actually go up because of the higher interest rate. That doesn't help much when you’re already struggling.
Enter the Partial Claim: A True Lifeline
The VA’s new Partial Claim program fixes this. Instead of rewriting your entire mortgage, the VA essentially steps in and says, "We’ll help you bridge the gap."
What is it?
The Partial Claim is a foreclosure prevention tool where the VA advances a specific amount of money to your loan servicer to bring your mortgage current. It’s not a gift, but it’s the most "veteran-friendly" loan you’ll ever find.
How it works:
- The Advance: The VA can advance up to 25% of your total loan balance to cover missed payments, late fees, and legal costs.
- Bringing it Current: This money goes directly to your lender. Instantly, your mortgage is no longer in default. You are back in good standing.
- Keeping Your Rate: This is the best part. Your original mortgage stays exactly the same. If you had a 2.75% rate, you keep that 2.75% rate. Your monthly payment doesn't change.
The "Catch" (That Really Isn't a Catch)
Whenever the government offers help, we’re conditioned to look for the fine print. In this case, the "catch" is simply how you pay the money back.
The VA doesn't just give you the 25%: they create what’s called a subordinate lien (or a second mortgage) on your home. But before you panic, here is why it’s actually a great deal:
- 0% Interest: You don’t pay a dime in interest on this secondary lien.
- No Monthly Payments: You don’t have to make any payments on this "partial claim" amount while you are living in the home.
- Pay it Later: You only pay the money back when you sell the house, refinance the mortgage, or finish paying off your original 30-year loan.
It’s basically a zero-interest bridge that waits until you have the equity or the cash from a sale to be repaid. It’s designed to provide immediate relief without adding to your monthly stress.
Who Does This Help?
This program is specifically for veterans with VA-backed loans who are in default or at serious risk of default. One of the most important aspects of the 2025 Reform Act is that it is retroactive.
If you were struggling between 2024 and 2025 and felt like there were no good options, this program is designed to catch you up. It’s meant to help the roughly 60,000 to 80,000 veterans who found themselves in a "gap" when previous pandemic-era protections ended.
Staying in the Home: Our Mission at Operation T.A.G.
At Operation T.A.G., we talk a lot about "Tangible Acts of Gratitude." We aren’t interested in just saying "thank you for your service." We want to see results that actually change your life.
One of the ways we do this is through our Hometown Hero Credit. While the VA’s Partial Claim helps you stay in your home during tough times, our program is designed to help you get into a home (or refinance) with more money in your pocket.
The Hometown Hero Credit Explained:
Our credit is a 2% credit (up to $21,000) based on the loan amount of your home. Because we are a non-profit organization, we can provide this benefit to military members, veterans, and Gold Star families to help offset the costs of homeownership.
Here is how you can use it:
- Closing Fees: Use the credit to wipe out your out-of-pocket closing costs.
- Interest Rate Buy Down: Use it to "buy" a lower interest rate, making your monthly payment even more affordable.
- Debt Pay Down: If you’re struggling to qualify for a VA loan because of existing debt, our credit can sometimes be used to pay down that debt to help you meet the VA’s requirements.
- Real Estate Fees: It can also be applied toward real estate agent fees.
A quick note on the rules: Since VA loans generally do not require a down payment, our 2% credit cannot be used for a down payment or for non-loan purposes. It is calculated on the loan amount, not the sales price.
Whether it's a government program like the Partial Claim or a non-profit benefit like our Hometown Hero Credit, the goal is the same: keeping the American Dream within reach for those who have defended it.
How to Take Action
If you are currently behind on your mortgage, don't wait for a foreclosure notice to arrive. The earlier you act, the more options you have. Here is a simple checklist to get started:
- Call Your Loan Servicer: Use the number on your monthly statement. Ask them specifically about the "VA Partial Claim" program under the 2025 Reform Act.
- Contact a VA Loan Technician: If your servicer isn't helpful, call the VA directly at 877-827-3702. They have technicians whose entire job is to help you avoid foreclosure.
- Gather Your Paperwork: Have your recent pay stubs and a basic breakdown of your monthly expenses ready. They will want to see that you have the income to handle your regular payments moving forward once the "past due" amount is cleared.
- Check Your Eligibility for Other Benefits: If you are looking to buy a new home or refinance an existing high-rate loan, make sure you look into the Hometown Hero Credit.
Visit www.OperationTAG.org to learn more about how we support military families through every stage of homeownership.
Final Thoughts
The VA Home Loan is one of the greatest benefits earned through military service. It was never intended to be a burden; it was intended to be a foundation for your family’s legacy. This new Partial Claim program is a massive step forward in ensuring that a temporary financial setback doesn't lead to the loss of your home.
You’ve stood the watch for us. Now, let these programs stand the watch for you.
Brett Stacy
National Director & Founder of the Hometown Hero Credit
A program of Operation T.A.G. (Tangible Act of Gratitude)
501(c)(3) non-profit project of HDCF
Contact Information:
Websites: www.OperationTAG.org and www.HometownHeroCredit.com
Phone: 760-456-8748 (24-hour Information Line)
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