Pennymac has begun evaluating distressed VA borrowers under the Department of Veterans Affairs’ new loss-mitigation waterfall nearly four months before the required implementation date, giving eligible homeowners early access to a permanent partial-claim option designed to resolve delinquency without increasing their regular mortgage payment.
Pennymac said Thursday that it is the first large mortgage servicer to implement the new waterfall, which all VA servicers must add to their systems by Nov. 28. The VA began accepting partial-claim submissions June 15 but gave servicers 180 days to update their technology, processes, and employee training.
The early rollout matters because access to the new relief is dependent on servicer readiness. Although the VA program is active, borrowers cannot receive a partial claim until their individual servicer has implemented both the partial-claim program and the broader loss-mitigation waterfall.
For Pennymac’s VA borrowers, that wait is now over.
“Being the first large servicer to launch this loss mitigation waterfall says a lot about the strength of Plaisse and the team behind it,” said Mark Acosta, Pennymac’s chief servicing officer. “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 it has served more than 1.1 million veteran customers over the life of its business. Current borrowers with Pennymac-serviced VA loans who experience financial hardship can now be evaluated under the new waterfall.
How The Partial Claim Works
Under the program, a servicer identifies delinquent borrowers who may qualify and places them on a three-month trial payment plan. After the borrower successfully completes the trial, the servicer advances the amount needed to bring the mortgage current, and the VA reimburses the servicer.
The partial-claim balance is repaid when the original mortgage is paid off, refinanced, or the property is sold. Moving the missed payments into that separate balance allows a qualifying borrower to retain the payment on the existing mortgage rather than immediately absorbing the delinquency through a payment-increasing modification.
A borrower cannot request the partial claim as a stand-alone option. The servicer must evaluate the loan through the VA’s prescribed waterfall, which also includes special forbearance, repayment plans, and 30- and 40-year modifications. The VA requires servicers to implement the waterfall and partial-claim program together.
The program was authorized under the VA Home Loan Program Reform Act, signed into law in July 2025 after the wind-down of the temporary Veterans Affairs Servicing Purchase program left a gap in the VA’s foreclosure-prevention framework.
The VA finalized the partial-claim program in June, restoring a home-retention tool similar to options already available for other government-backed mortgages.
Relief Arrives As VA Distress Rises
Pennymac’s rollout comes as loan performance is deteriorating among some recent VA borrowers.
The share of VA mortgages at least 90 days delinquent or in active foreclosure reached 2.3% in June, up 0.4 percentage points from a year earlier, according to ICE. New VA defaults increased 25% year over year during the second quarter, the largest increase among the major loan categories ICE analyzed.
That distress is concentrated among more recent borrowers with limited equity. As NMP reported Tuesday, three-quarters of underwater borrowers financed their homes with FHA or VA loans, while borrowers who originated mortgages in 2022 or later accounted for nearly 35% of active foreclosures.
Those borrowers may have little ability to sell or refinance their way out of financial trouble, making access to loss mitigation more consequential.
For originators specializing in military lending, the rollout also provides a more concrete answer to borrower questions about what happens after closing if an unexpected hardship occurs. The partial claim does not eliminate the missed payments, but it can allow a qualifying veteran to become current without giving up the terms of the original mortgage or immediately taking on a higher payment.
A Test Of Pennymac’s Servicing Strategy
The launch also carries a broader business message for Pennymac.
The company attributed the accelerated implementation to Plaisse, its proprietary servicing platform, saying its compliance and operations teams were able to translate the VA’s policy into platform rules without relying on an outside technology provider.
That claim arrives as Pennymac prepares for a major increase in servicing scale. The company agreed in February to acquire Cenlar’s subservicing business for $172.5 million upfront and up to $85 million in contingent consideration.
Cenlar’s portfolio is expected to add approximately $740 billion in unpaid principal balance and roughly 2 million loans, potentially pushing Pennymac’s servicing portfolio above $1 trillion. The transaction is expected to close during the second half of 2026, subject to regulatory approval and other closing conditions.
Implementing the VA waterfall early therefore does more than support Pennymac’s existing veteran borrowers. It provides an operational proof point for the servicing technology Pennymac expects to use at substantially greater scale.
*This article was primarily written by a human author. AI tools were used in a limited capacity for research assistance or light editing.
