Pennymac Implements New VA Loss-Mitigation Program Ahead of Deadline

PennyMac Financial Services announced on 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 ahead of the agency's November 28 deadline. This rollout follows the VA's finalization of updates to its loss-mitigation and partial-claim policies, stemming from the 2025 VA Home Loan Program Reform Act.

Under the new program, eligible borrowers with VA-backed mortgages can receive assistance from the VA to cover a portion of missed mortgage payments, bringing their loans current. This amount, typically capped at 25% of the unpaid principal balance, is placed as a subordinate lien that does not require monthly payments and is repaid when the home is sold, refinanced, or paid off.

The updated loss-mitigation process mandates that servicers evaluate borrowers through a standardized sequence of foreclosure prevention options before initiating foreclosure. The partial claim option is available to borrowers who have recovered from financial hardship and successfully completed a three-month trial payment plan. PennyMac stated that its proprietary servicing platform, Plaisse, facilitated this early implementation.

Mark Acosta, PennyMac's chief servicing officer, highlighted the company's ability to move quickly due to owning its servicing platform, enabling faster relief for veterans experiencing hardship. The VA finalized the policy after incorporating industry feedback, notably removing a proposal that would have allowed some loan modifications associated with a partial claim to increase borrowers' monthly payments by up to 15%, a move opposed by mortgage industry groups.