The VA Loan Reform Act (H.R. 1815) officially became law today with President Trump’s signature, following passage in both chambers of Congress. The legislation introduces significant updates to the Department of Veterans Affairs’ mortgage servicing program and aims to address longstanding gaps in loss mitigation for veteran borrowers.
One of the most consequential changes is the establishment of a permanent partial claim program for VA loans. The new authority allows the VA to advance funds to cover missed payments for borrowers in serious delinquency. These advances will be structured as subordinate liens, enabling borrowers to become current on their mortgage without refinancing or altering their original loan terms. The structure closely mirrors existing programs administered by the FHA and USDA.
The need for this reform has grown in urgency since the shutdown of the VA Servicing Purchase (VASP) program on May 1, 2025. VASP had provided loss mitigation relief to approximately 35,000 seriously delinquent borrowers, allowing the VA to purchase, modify, and hold those loans. Following its termination, more than 43,000 VA loans remained six or more months delinquent as of June, with no comparable program in place.
Foreclosure activity has also begun to rise, largely attributed to a backlog of cases that could not move forward during COVID-era moratoriums or while VASP was in place. Industry participants have expressed concern about the absence of alternatives for distressed veteran borrowers during this transition period.
The new law also makes permanent the suspension of the VA’s prohibition on buyer-paid real estate agent commissions. That rule had previously limited the competitiveness of VA buyers in markets where sellers declined to cover agent fees. While the VA had suspended the policy temporarily in 2023, the change is now codified in statute, providing long-term clarity for lenders, agents, and borrowers.
In addition to servicing and transactional updates, the legislation expands funding for transitional housing under the VA’s Grant and Per Diem (GPD) program and supports implementation of veteran homelessness provisions passed in earlier bills.
For lenders, the law provides much-needed alignment between VA and other federal loan programs. The partial claim authority gives servicers a structured solution for seriously delinquent borrowers, reducing the likelihood of foreclosure while preserving the original mortgage terms. This is expected to improve both borrower retention and servicing outcomes.
The permanent buyer agent compensation change also reduces friction in the homebuying process for VA borrowers, particularly in competitive housing markets where traditional VA offers had been disadvantaged.
