PennyMac Financial Services said Thursday that it has become the first large mortgage servicer to implement the U.S. Department of Veterans Affairs‘ (VA) new loss-mitigation waterfall, including the VA Partial Claim option, nearly four months before the agency’s Nov. 28 implementation deadline.
The rollout comes days after the VA finalized updates to its loss-mitigation and partial-claim policies, implementing provisions of the 2025 VA Home Loan Program Reform Act. The law established a permanent partial claim option after the wind-down of the Veterans Affairs Servicing Purchase (VASP) program left the agency without a long-term foreclosure prevention alternative for financially distressed borrowers.
Under the new program, eligible borrowers with VA-backed mortgages can have a portion of their missed mortgage payments covered by the VA to bring their loans current.
The amount, generally capped at 25% of the unpaid principal balance, is placed in a subordinate lien that requires no monthly payments and is repaid when the home is sold, refinanced or otherwise paid off.
The updated loss-mitigation waterfall also requires servicers to evaluate borrowers through a standardized sequence of foreclosure prevention options before initiating foreclosure. The new partial claim option is available to eligible borrowers who have recovered from a financial hardship and have successfully complete a three-month trial payment plan.
Pennymac said borrowers who have VA loans serviced by the company and are experiencing financial hardship can now be evaluated under the new waterfall.
The company attributed the early rollout to its proprietary servicing platform, Plaisse, which it said allows for rapid implementation of regulatory changes.
“Being the first large servicer to launch this loss mitigation waterfall says a lot about the strength of Plaisse and the team behind it,” Mark Acosta, the company’s chief servicing officer, said in a statement. “We built and own our servicing platform, so we can move faster. We used that speed to get more relief options in front of veterans, because a homeowner needs help the moment hardship hits.”
Pennymac said its compliance and operations teams previously used the same approach to implement programs created under the CARES Act and the VASP program.
The VA finalized the policy after months of industry feedback on draft guidance released in March, including removing a proposal that would have allowed some loan modifications associated with a partial claim to increase borrowers’ monthly payments by as much as 15%. Mortgage industry groups opposed that provision, arguing that higher payments could reduce the effectiveness of foreclosure prevention efforts.
The VA gave servicers an 180-day implementation period to update systems and train staff, with mandatory compliance beginning Nov. 28. Pennymac said its implementation allows eligible borrowers to be evaluated under the new framework well ahead of that deadline.
This article was written by Sarah Wolak and generated with the assistance of HousingWire Automation, then reviewed by a HousingWire editor before publication.
