Pennymac, one of the country’s largest VA loan servicers, has officially launched a VA partial claim option for eligible borrowers facing mortgage hardship. The timing is deliberate: VA’s loss mitigation waterfall is set to change in November, and servicers that don’t have a compliant partial claim product in place before that deadline are going to have a problem. Pennymac moved early. Most borrowers don’t even know this tool exists yet.
Here’s what it means, who it helps, and why Arizona veterans in particular should pay attention right now.
What the VA Partial Claim Actually Does
The partial claim option works by pulling your missed mortgage payments — principal, interest, escrow advances — into a separate junior lien held by the Department of Veterans Affairs. That balance sits there, interest-free, due when you sell or refinance the home. Your regular mortgage gets reinstated at its original terms, and you move forward with the loan you already had.
Think of it as a structured way to park the debt without destroying your loan or your home equity.
This isn’t new territory for the federal government. FHA has used partial claims for years, and FHA recently proposed further refinements to its own partial claim model that would reduce the lien burden even further. VA is now building out something structurally similar. Pennymac’s early rollout positions them to execute on these cases before other servicers have their systems ready.
Why the November Deadline Matters
VA announced the update to its loss mitigation guidance earlier this year, giving servicers a runway to implement. After November, the partial claim becomes a required step in the loss mitigation waterfall — meaning before a servicer can move toward foreclosure on a VA-backed loan, they have to exhaust options including the partial claim.
That’s a significant shift. Right now, partial claim availability is inconsistent across servicers. Some have it, some don’t, some have it in name only with processing delays that stretch for months. The November deadline forces standardization.
For borrowers, this matters in a few specific ways:
- If you’re currently in forbearance on a VA loan, the partial claim may be the cleanest exit — no rate modification, no extension headaches, just a tidy separation of what you owe from your current payment.
- If you’ve already exited forbearance with a repayment plan that’s straining your budget, it’s worth asking whether a partial claim could replace that arrangement.
- If foreclosure proceedings have started, the partial claim can potentially still halt the process if the servicer hasn’t passed certain milestones — but time is genuinely short in those cases.
The window to use this tool proactively, before things deteriorate further, is always better than scrambling at the last moment.
The Arizona Angle
Metro Phoenix has a large active-duty and veteran population — between the proximity to Luke Air Force Base in Glendale, Fort Huachuca down in Sierra Vista, and the general migration of veterans into the Sun Belt over the past decade, Arizona carries significant VA loan volume.
As of recent market data, VA loans account for a meaningful share of purchase originations in cities like Surprise, Goodyear, and Peoria — all communities that saw rapid price appreciation between 2020 and 2023, followed by the affordability squeeze that came with rates climbing past 7%. Some veterans who bought at the peak with VA financing are now in a tricky spot: values have softened in certain pockets, and any disruption to income — a job change, a medical situation, a PCS that didn’t go as planned — can knock a household into hardship faster than you’d expect.
Foreclosures are climbing across the board, and VA loans are showing stress alongside FHA products. The partial claim exists precisely for these situations. It’s not a bailout — the borrower still owes the money — but it restructures the debt in a way that keeps families in their homes.
What to Do If You Think You Qualify
If you have a VA-backed mortgage and you’re struggling — whether you’re in active hardship right now or you can see it coming in the next 60 to 90 days — here’s how to move:
- Call your servicer directly and ask specifically about the VA partial claim option. Use those exact words. Some customer service reps won’t volunteer it.
- Document your hardship clearly. Servicers need a hardship letter and supporting financials. Get that paperwork organized before you call.
- Don’t wait for the November deadline to make this decision for you. Servicers are going to be flooded with requests as that date approaches. Getting into the queue now gives you better processing times and more options.
- Talk to a VA-approved HUD housing counselor if you’re not sure where you stand. They can help you understand what the servicer is actually offering versus what they’re required to offer.
One more thing worth flagging: the partial claim creates a junior lien. That affects your equity math and your ability to refinance cleanly down the road. If you’re a veteran planning to sell in the next year or two — and plenty of people in the Phoenix market are — understand what that lien means for your net proceeds before you sign.
Military buyers and veterans deserve honest, detailed guidance on how these tools interact with their broader financial picture. A partial claim done right is a smart tool. Done without understanding the mechanics, it can create confusion at closing.
The Bottom Line
Pennymac’s early launch of the VA partial claim is a good signal — it shows at least one major servicer is serious about having this option functional before the mandate hits. But servicer readiness doesn’t automatically translate to borrower awareness. Most veterans in hardship don’t know this tool is available, and some servicers will still find ways to push borrowers toward less favorable options if they’re not asked directly.
If you’re a veteran with a VA loan and any level of financial stress, this is the moment to ask the question. The partial claim won’t solve every problem, but for borrowers who need to get their footing without losing their home, it’s one of the better tools on the table right now.