Short answer: if you are behind — or about to be — call now, not at 90 days

If you are behind on your VA loan, or you can see the month coming where the payment will not get made, real options exist — and the earlier the call, the more of them are still open. The U.S. Department of Veterans Affairs requires your servicer to work through a defined ladder of help before foreclosure: special forbearance, a repayment plan, and the new VA partial claim all come before a loan modification, and when a modification is the answer, it can extend your term as far as 40 years. (Source: VA.gov, “VA help to avoid foreclosure,” and VA Servicer Handbook M26-4, Chapter 5, Loss Mitigation.) Falling behind is a problem to solve. It is not the end of the loan, and it is not the end of the benefit — but the ladder gets shorter every month you wait.

Why the timing matters more than the option you pick

Here is the part nobody tells you until it is too late. Under the VA’s loss mitigation waterfall (M26-4, Chapter 5), your servicer must review your loan step by step and offer the option the waterfall points to. But the steps available depend on how far behind you are: if your loan is less than three full months past due, the servicer works Steps 1 through 5 — the gentler end of the ladder. The deeper steps, including the longer modifications, only open up at three or more months past due. In other words, early trouble gets early tools, and those tools are the least damaging ones on the list.

There is also a federal clock running in your favor — if you use it. Under the Consumer Financial Protection Bureau’s mortgage servicing rules (Regulation X, 12 C.F.R. § 1024.41), a servicer generally cannot make the first legal filing to start foreclosure until your loan is more than 120 days delinquent. That sounds like breathing room, and it is — but it is a window, not a pause button. Interest and fees keep accruing, credit damage compounds, and state timelines after that first filing vary enormously: some non-judicial states move from filing to sale in a few months, while court-supervised states can run a year or more. And the VA adds its own layer: once a VA-guaranteed loan is 61 days past due, VA automatically assigns a loan technician to review your loan (VA.gov). You can reach a VA loan technician yourself at 877-827-3702 — and VA will counsel veterans and surviving spouses even if the loan is not a VA loan.

Our take: the single worst move is silence. Servicers cannot offer a plan to a borrower they cannot reach, and every option below gets harder — or disappears — as the months stack up. Call the day you know a payment will be missed. Not when the letter arrives. Not at 90 days.

The ladder, least damage first

1. Special forbearance — time, when time is the whole problem

A special forbearance gives you extra time to repay missed payments — typically because something specific and temporary went wrong: a medical bill, a gap between jobs, a delayed VA or insurance payment. One honest caution from VA’s own description: forbearance does not automatically add your missed payments to the end of the loan. You and your servicer agree up front on how those payments get handled when the forbearance ends (VA.gov). It is the right tool when the income is coming back and you mainly need the calendar to cooperate.

2. Repayment plan — catch up in pieces

If you missed a few payments but your regular income is intact, a repayment plan puts you back on your normal payment plus an extra amount each month until the missed payments are covered (VA.gov). No new loan terms, no restructure — just a structured catch-up. VA encourages servicers to consider repayment plan terms of up to 24 months to keep that extra amount affordable (M26-4, Chapter 5). For a borrower whose setback is already behind them, this is often the cleanest exit on the whole ladder.

3. VA partial claim — the new one, and worth knowing by name

This is the newest tool on the ladder, and it replaced the old rescue program most articles still describe. Under the VA Home Loan Program Reform Act (Public Law 119-31, signed July 30, 2025), VA created a permanent partial claim: VA works with your servicer to pay your missed payments and bring the loan current, and you repay that amount later — when you pay off the loan or sell the home — not out of next month’s paycheck (VA.gov). Before the partial claim, you must complete a 3-month trial payment plan: three straight months of on-time mortgage payments proving the payment works. VA’s foreclosure help page states the program is now open for submissions, with servicers given until November 28, 2026 to have partial claims built into their systems — so if a servicer tells you the option does not exist, ask again, in those words, and call a VA loan technician. Two honest flags: the COVID-era partial claim from 2020–2021 was a different, temporary program and it is over; and the Veterans Affairs Servicing Purchase program (VASP) — the 2.5% VA purchase program you may have read about — stopped accepting new cases on May 1, 2025 (VA Circular 26-25-2). If a website is still steering you to VASP, it is out of date.

4. Loan modification — traditional, 30-year, and 40-year

When the setback is permanent — income reset lower, disability changed the household math — the missed payments and related legal costs can be rolled into the loan balance and the loan rebuilt on a new schedule. VA’s ladder carries three versions (VA.gov): a traditional modification, which reworks your existing terms; a 30-year modification, which resets the term to 30 years when that produces a lower principal-and-interest payment; and a 40-year modification, the final step of the waterfall, which extends the term to 40 years to get the payment as low as term alone can take it (M26-4, Chapter 5). Every modification runs through a trial payment plan first. Two things to hold onto: VA warns plainly that at today’s rates a modification can produce a higher payment, not a lower one — run the actual number before you sign anything — and a 40-year term trades a smaller monthly payment for substantially more interest over the life of the loan. Sometimes that trade saves the home and is worth it. It should never be made blind.

This is also where I will be direct about my own shop, because it is the reason this post exists: we have products to help before a loan mod to 40 years — options that can be worth pricing before you lock yourself into a servicer’s restructure. Not every file qualifies for every product, and a servicer modification is sometimes genuinely the best answer. But you will not know which one you are looking at until somebody runs your file both ways.

5. Refunding — real, rare, and not something you apply for

VA also holds a discretionary power called refunding: under 38 U.S.C. § 3732 and 38 C.F.R. § 36.4320, VA can purchase your loan from the holder — paying the unpaid balance plus accrued interest — and become your lender when standard loss mitigation is not feasible. Be clear-eyed about it: the law gives borrowers no right to a refunding and there is no application. VA considers it on its own, in default cases, where VA judges it in the best interest of both the veteran and VA. It belongs on this list so you know it exists — not as a plan to count on.

If keeping the home is not the right answer

Sometimes the honest math says the house has to go — and even then, how it goes matters. VA’s alternatives (VA.gov; M26-4, Chapter 5) include extra time to arrange a private sale, a compromise sale — the VA name for a short sale, where the servicer accepts the sale proceeds as full payment even when you owe more than the home is worth (38 C.F.R. § 36.4322(e)) — and a deed in lieu of foreclosure, where you sign the deed over and skip the foreclosure process itself. VA authorizes servicers to advance up to $1,500 in relocation assistance to borrowers who complete a short sale or deed in lieu. All three beat a foreclosure sale on your record, and all three carry the same warning VA prints itself: they can reduce or cost you future home loan benefit until any VA loss is repaid and entitlement is restored. If a loan has already ended that way, I wrote the restoration side of this separately: how to restore your VA entitlement after a foreclosure or short sale. This post is about the earlier, better fight — the one that happens before it gets there.

What I would do in your shoes

Call your servicer first and use the exact words: “I want to be reviewed under the VA loss mitigation waterfall.” Write down every name, date, and promise. If the answers stall or contradict the ladder above, call a VA loan technician at 877-827-3702 — that is literally what they are there for, and VA reviews the loan automatically at 61 days past due whether you call or not. Then get a second set of eyes on the numbers before you accept any modification — especially a 40-year one. That is the seat I sit in: a mortgage broker who works VA files every week, who can tell you whether a product on our side helps you before the modification — and who will tell you straight if the servicer’s plan is the better one. A bank works from its own menu. I work from yours.

Contact us asap for your options — set up a call with Douglas. The discussion below costs nothing, and the earlier it happens, the longer the ladder is.

If you could talk to one person this week who would lay out every option on your VA loan — servicer’s and ours — in plain numbers, what is the first question you would ask?

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