Policy & Fiscal Analysis · Who each barrier excludes
Who each barrier excludes
The conditions VA wrote, who each one shuts out, and the authority Congress actually gave.
Who wrote the barriers · statute vs handbook
Congress wrote the authority. The VA wrote the exclusions.
You may have heard: “why can’t they just start paying again” →
Key finding · what the barriers add up to
DOCUMENTED FACTThe program built as the emergency replacement for the gap-harmed families contains a stack of status barriers that screen out exactly those families. The harm and the disqualifier are the same event.
The policy is forward-only. Nothing in it reaches a family foreclosed on, evicted, or pushed into a high-rate modification or short sale before it took effect. For them there is no pathway, which is why the unused Section 3(h) authority, and counting-and-rehousing, still matter.
What Congress granted (statute)
- A permanent Partial Claim authority (38 U.S.C. § 3737)
- A mandatory loss-mitigation sequence. The VA “may not purchase” a loan until the veteran has completed it (§ 3732(d))
- A claim ceiling of 25% of the balance, 30% for the COVID/VASP cohort (both set by Congress)
- Emergency interim-guidance authority to reach loans already in default (Section 3(h) / § 3737(h)), available, never used
What the VA added (M26-4 Ch.22)
- Three or more full months past due (§ 22.02 a.2)
- Not in active bankruptcy (a.4)
- No pending or active foreclosure (a.5)
- Current legal owner of record (a.8)
- No COVID-19 partial claim already paid (a.10)
- No loan modification in the prior 24 months (a.7); 12+ payments made (a.6)
- Foreclosure halted only where a trial plan is offered, not for the full evaluation (§ 22.03 a.2)
The barriers in the right-hand column are the ones that exclude the harmed families, and none of them was written by Congress. They live in a VA handbook the Secretary can revise, and are reversible without new legislation. The statute needs Congress; the policy needs only the Secretary.
Three of these ten do most of the work, and they are the three named elsewhere on this site: the active-default requirement, the current-owner requirement, and the three-month trial payment plan. Which condition shuts out which group is set out below.
The event that harmed you is the gate that excludes you
Congress ordered a broad program. Each VA-added barrier narrows it, and every barrier screens out a family because of the very harm they need help for. The dark bar is what Congress wrote into law. Every bar outlined in red is a condition VA added in its own handbook, not in the statute.
Text description: a funnel that starts at Congress’s broad statutory program and narrows through four VA-added eligibility barriers, each screening out families harmed by the exact event the barrier names, until only forward-looking, currently-owning, previously-unhelped families remain.
The same barriers as a table
| Barrier | Source | Who it excludes |
|---|---|---|
| §3737 “shall carry out” | Statutory (H.R. 1815) | , (grants the program) |
| a.5 no pending foreclosure | VA-added (M26-4 Ch.22) | Families already in foreclosure |
| a.8 current owner of record | VA-added (M26-4 Ch.22) | Families already foreclosed on / displaced |
| a.10 no prior COVID partial claim | VA-added (M26-4 Ch.22) | The forbearance families |
| a.4 no active bankruptcy | VA-added (M26-4 Ch.22) | Those who filed to stop the sale |
Community-reported illustration
COMMUNITY-REPORTEDA Wyoming veteran family with the same servicer as cohort families in three other states kept every document. Their COVID forbearance approval contains no disclosure that a lump-sum balloon would come due at exit; their modification denial states the borrower “indicated” he could not resume payments, which he disputes in a contemporaneous handwritten note. They are fighting eviction now.
They are not alone in the gap. Families in Washington, Wyoming and California report going through eviction now; others are in the middle of bankruptcy or short sales that no policy arrived in time to prevent; and others are still holding out hope that the H.R. 1815 policy rollout becomes accessible to them before they have to take a short sale, a deed-in-lieu, or a foreclosure. Illustration, never proof of liability.
Delay and exclusion
The clock only moves families one way, and it does not move them back
The window reaches backward. The barriers reach forward. Every day between them, the two meet in more households.
The section above sets out the two halves separately: a program written to reach families harmed across the pandemic years, and a set of conditions in the Department's own handbook that a family must satisfy to use it. Read as a pair they do something neither does alone.
The window is fixed and it points at the past. It covers a period that has already ended. Nothing a family does now moves them into it, and nothing moves them out.
The barriers are not fixed. They are conditions about a family's situation TODAY and they change as that situation changes. Still the owner of record. Still living in the home. Not in an active foreclosure. Each is a description of where a household stands at the moment it applies.
PROJECT ANALYSIS So the two halves move at different speeds and in opposite directions. The set of families the window covers is closed and cannot grow. The set of families the barriers exclude grows every day the program is not operating, because a household that is behind on payments and waiting does not stay still. It moves toward foreclosure, and foreclosure is one of the conditions that excludes it. S151
That is the part worth being exact about, because it is what makes this different from an ordinary delay. A late program normally costs people time. This one costs eligibility, and it is not recoverable. A family that crosses into active foreclosure while waiting does not become eligible again when the program finally runs. The delay does not postpone the remedy for them. It removes it.
The Department is not without a tool for exactly this group. Congress wrote one into the same law, and this page records above that it is available and has not been used. An emergency authority that exists to reach families already in default is the precise answer to a barrier that excludes families already in default. S151 S183
What this does not establish
It does not establish intent, and this project does not claim it. Everything above describes how two published rules interact. Whether anyone intended that interaction is a different question, and nothing in the public record answers it. Words like engineered, deliberate and on purpose are characterisation, not documentation, and they are not used here.
No individual official is named in this section, and no motive is attributed to anyone. The observation is about two rules, both published, that a reader can hold up against each other without taking anybody's word for it.
Where the rules came from
There is no public docket where anyone could have objected, and that is lawful
The rules did not arrive as a regulation. They arrived as a handbook, which the statute allows.
This page sets out which conditions Congress wrote and which the Department added. A reader who gets that far usually asks the next question by themselves: where were these published, and who got to object?
DOCUMENTED FACT The policy did not issue as a regulation. It issued as guidance in the servicer handbook, published on the Department's own self-service portal. The statute expressly permits that: the Secretary may, before prescribing regulations, issue administrative guidance. S019 S184
PROJECT ANALYSIS So there was never a rulemaking, which means there is no comment docket, no published comment record, and no response-to-comments document. Searched on the federal rulemaking portal using the parameter its own search box uses: nothing for this handbook chapter and nothing for the ten qualifying conditions.
THIS IS NOT A CLAIM THAT ANY RULE WAS BROKEN, and the distinction is the whole point. The statute allows guidance before regulations, so proceeding this way was permitted. What follows is not about legality. It is about whether anyone outside the Department can check the work.
Set it beside the other half of this page and the two meet. Seven of the ten qualifying conditions appear nowhere in the statute, and there is no place on the public record where anyone could have said so at the time. Rules nobody voted on, and no docket anyone could file in. Those are the same fact from two directions.
What was searched, and what is not claimed
The federal rulemaking portal was searched in a browser rather than by script, because its filter parameter returns the whole corpus rather than searching it, which would have produced a false result either way. The instrument was checked before any absence was reported.
Not established, and it must not be asserted: that the Department was required to conduct notice-and-comment rulemaking. The statute says the opposite. The finding is about checkability, and nothing here says otherwise.
Who each barrier excludes
Each condition shuts a different door, and most readers only need to know about one
The list above is the rule. This is what the rule does to a household.
Counting the conditions is bookkeeping. What matters to somebody reading this while behind on a mortgage is narrower and more urgent: which one of these is about me, and am I already out?
The answer is different for every group, and the conditions do not fall on people evenly. Some exclude a household for something that happened years ago. Some exclude a household for the very step it took to protect itself.
| The condition | Who it shuts out |
|---|---|
| No pending or active foreclosure a.5 | Anyone already in the foreclosure process, which is the group the program was created to help. A household is not excluded for anything it did. It is excluded for the thing that happened to it |
| Current legal owner of record a.8 | Everyone past a trustee sale. Once title has moved, the condition can no longer be met by any action the family takes |
| No COVID-19 partial claim already paid a.10 | Families who used the help the Department offered during COVID, as they were told to. Taking the earlier relief is what disqualifies them from this one |
| No loan modification in the prior 24 months a.7 | Families pushed into a modification while waiting, including modifications at rates far above the one they started with. Accepting an offer closes the door for two years |
| Not in active bankruptcy a.4 | Families who filed as an emergency brake to stop a sale. The step taken to buy time removes the option that would have used it |
| Twelve payments made since origination a.6 | Recent purchasers. A household that bought and then hit trouble early has not had time to qualify |
| Three or more full months past due a.2 | Households trying to stay current. A family that is struggling but has not yet missed three months is not eligible until it falls further behind |
| Foreclosure halted only where a trial plan is offered 22.03 a.2 | Families who cannot carry three months of payments before any permanent relief begins, and families whose evaluation runs while the foreclosure clock does not stop |
DOCUMENTED FACT the conditions S184 S013 PROJECT ANALYSIS the group each one shuts out
Read down the right-hand column and a pattern appears that no single condition shows on its own. Several of them exclude a household for something that cannot be undone: a sale that already happened, relief already taken, an offer already accepted. Those are not tests a family can go and pass. They are descriptions of a past that is fixed.
What this table does not do
It is not eligibility advice and it cannot tell any particular household whether it qualifies. The conditions interact, a servicer applies them to a file this project has never seen, and only the servicer and the Department can answer for a specific loan. If a condition here looks like it describes you, that is a reason to ask them in writing, not a reason to stop asking.
The right-hand column is reasoning, not a finding by anyone. No agency, court or watchdog has published a group-by-group analysis of who these conditions exclude. This one is derived from the conditions as written, and a reader who disagrees can check it against them.
No household appears here. This project holds case material that works through these conditions against real families. That material is not public site content, and the pattern above is stated without it on purpose.
Congress wrote three conditions. The handbook lists ten.
Seven of the ten eligibility rules for the VA Partial Claim Program appear nowhere in the law Congress passed.
Key finding · who wrote the barriers
DOCUMENTED FACTCongress created the Partial Claim Program at 38 U.S.C. § 3737 in July 2025 with a three-condition eligibility test. VA’s implementing handbook, M26-4 Chapter 22, effective June 1, 2026, lists ten qualifying criteria. Seven do not appear in the statute. Removing them requires no new legislation, only the same discretion VA used to add them.
Limit: this compares the text of the statute with the text of the handbook. It establishes that seven criteria are agency additions, not that any one of them is unlawful.
| Handbook | What it requires | Who it stops | What 38 U.S.C. § 3737 says |
|---|---|---|---|
| a.2 | “The servicer determines at the time of submitting the Partial Claim TPP event in the Veterans Affairs Loan Electronic Reporting Interface (VALERI) that the guaranteed loan is at least three (3) full months past due.” | A family that asked for help early, before falling three months behind | Silent. No months-past-due floor appears in the statute |
| a.4 | “The servicer has confirmed that the borrower is not in active bankruptcy.” | A family that filed to stop the sale. The tool that halts the foreclosure disqualifies them from the relief that cures the default | Silent. The statute never mentions bankruptcy |
| a.5 | “The servicer has not been notified of any pending or active foreclosures (for example, those brought by a Homeowner’s Association (HOA) or any other lien holder).” | A family already in foreclosure, which is most of the families this program was written for | Silent, and § 3737(a)(3) makes a loan eligible where the Secretary determines it “is in default or at imminent risk of default” |
| a.6 | “The borrower has made at least twelve (12) monthly payments on the guaranteed loan since origination.” | A family in the first year of a loan, including one refinanced into it | Silent. No payment count appears in the statute |
| a.7 | “The borrower has not received a loan modification in the 24 months preceding the date the servicer evaluates the loan under the Waterfall.” | A family whose servicer modified their loan and it did not hold. See the clock below | Silent. No lookback of any length, and no reference to a prior modification |
| a.8 | “The servicer has confirmed that the borrower is the current legal owner of record.” | A family that already lost the house, and a surviving or former spouse who never assumed the note | Silent |
| a.9 | “All individuals obligated on the guaranteed loan promissory note are willing and able to execute the Partial Claim Attestation Document timely” | A family where a co-obligor cannot be reached or will not sign. The chapter waives this where someone divested title, did not retain it after divorce, was released by assumption, or “committed domestic violence” | Silent |
Read against the final chapter, KnowVA article 554400000324999, on August 21 2026. The statute contains no reference to bankruptcy, a prior loan modification, a lookback of any length, a count of payments since origination, or a pending foreclosure. DOCUMENTED FACT S184 S019
Rulemaking · the comment window
The rule people commented on is not the rule that took effect.
VA published a draft Chapter 22 in February 2026 and took public comment. Everyone who commented, including veterans service organizations, was reading a document with nine qualifying criteria. The chapter that took effect on June 1 2026 has ten, and the difference is not one addition. Both documents are public and the changes can be read side by side.
| Change | What the draft said | What the final says | Effect on a family |
|---|---|---|---|
| Added | Nothing like it. The draft asked only that “If the loan has been modified, the borrower must also have made at least six (6) monthly payments since the most recent modification.” | A new standalone criterion, a.7: “The borrower has not received a loan modification in the 24 months preceding the date the servicer evaluates the loan under the Waterfall.” | Much harsher. Six payments is something a family can complete. Twenty four months is a wait they cannot shorten |
| Removed | Criterion 5: “The servicer confirms the VA-guaranteed loan remains in first lien position.” | Gone. No first lien requirement | Helps. A second lien or a recorded judgment no longer disqualifies. This is the one change that opened the door wider |
| Split | Criterion 8 combined being the legal owner of record with everyone on the note signing | Two criteria, a.8 and a.9, and a.9 adds waivers where a co-obligor divested title, did not retain it after divorce, was released by assumption, or “committed domestic violence” | Helps. The draft required every obligor to sign “even if such an individual no longer holds any title interest” |
| Dropped | Repayment came due “When the borrower transfers title to the property by voluntary or involuntary means.” | That trigger is gone. Repayment is due at maturity, termination, or payoff of the unpurchased portion | Helps. A sale or a foreclosure no longer calls the whole balance in by itself |
| Tightened | If a trial payment plan failed, “the servicer is not required to report the TPP failure to VALERI.” | “the servicer must report the TPP Failed Event in VALERI” | Helps, and it is the accountability change. Failed trial plans are now counted |
Four of the five changes made the program easier to reach. The one that did not is the one nobody had a chance to comment on, and it is the barrier that turns on what a servicer already did to a family.
M26-4 Chapter 22, February 2026 draft compared line by line with the June 1 2026 final, both read in full August 21 2026 · DOCUMENTED FACT
One claim per loan · scope
The statute limits one claim per loan. The handbook extends that to a different program.
Borrowers who used COVID era help exactly as instructed are now disqualified from the program meant to replace it. 38 U.S.C. § 3737(c)(2)(A) provides that the Secretary may make only one partial claim per loan. By its terms that limit applies to claims under that section. Handbook criterion 10 extends the disqualification to a COVID-19 Veterans Assistance Partial Claim Payment, made under 38 C.F.R. part 36 subpart F and a separate authority, and to a COVID-19 Refund Modification. Neither is a § 3737 partial claim.
38 U.S.C. § 3737(c)(2)(A); M26-4 § 22.02 criterion 10 · DOCUMENTED FACT
Criterion a.7 · a barrier with a clock in it
The event that harmed a family is the barrier that excludes them, and it expires on a date.
Every other barrier turns on something a family already is: three months behind, in bankruptcy, in foreclosure, too new to the loan. This one turns on something a servicer did to them. The final chapter puts it this way: “The borrower has not received a loan modification in the 24 months preceding the date the servicer evaluates the loan under the Waterfall.” Read the last clause. The clock runs to the date the servicer evaluates, not to any date the family controls. So a family whose modification failed is eligible or not depending on when the servicer gets to them. Ask in month 23 and the answer is no. Ask in month 25 and nothing has changed except the calendar. The February 2026 draft asked instead for six payments since the most recent modification; the final replaced that with the flat 24 months.
M26-4 Chapter 22 § 22.02 a.7, final, effective June 1 2026; 38 U.S.C. § 3737 · DOCUMENTED FACT
The sequence · § 3732(d) and what actually stops a sale
Congress made the sequence mandatory. The handbook makes the foreclosure halt wait for a trial payment plan.
This is the whole of 38 U.S.C. § 3732(d), added by the same July 2025 law that created the partial claim:
“The Secretary shall prescribe loss mitigation procedures, including a mandatory sequence in which the holder of a loan guaranteed under this chapter shall offer loss mitigation options (including an option to enter into a partial claim agreement under the VA Home Loan Program Reform Act) to a veteran, to help prevent the foreclosure of such loan. The Secretary may not purchase an entire such loan until the veteran has completed such sequence.”
38 U.S.C. § 3732(d), added by Pub. L. 119-31 § 2(a)(3), July 30 2025
It sets no trial payment plan as a precondition for anything. The handbook does. Section 22.03 a.2 of the final chapter is one sentence long:
“Servicers must cease initiating, continuing, or completing foreclosures on loans where a TPP is offered to the borrower.”
M26-4 Chapter 22 § 22.03 a.2, final, effective June 1 2026
Read what turns the halt on. Not a request for help, not a default, not a referral to foreclosure. A trial payment plan being offered. And a trial payment plan is offered only when all ten qualifying criteria are met: “Servicers will only offer a TPP when the qualifying criteria are met.” So every barrier in the table above is also a barrier to the thing that stops the sale. A family who fails any one of them keeps the foreclosure running while they are being evaluated.
38 U.S.C. § 3732(d), read against law.cornell.edu and uscode.house.gov on August 21 2026, word for word identical; M26-4 Chapter 22 §§ 22.02 a, 22.03 a, final · DOCUMENTED FACT
Who the program can see
The chapter recognises a spouse when the marriage ends or the borrower dies, and not while the household is intact.
Searched in full on August 21 2026, the final chapter contains no occurrence of the words co-borrower, caregiver or household. It does address family circumstance, carefully, and every instance is an exception to a rule about one borrower: a former spouse who received the property through a divorce, a surviving spouse who received it from the estate, a Successor in Interest who completed an assumption before the default, a borrower deployed or hospitalised or in long-term care, and a co-obligor whose signature is waived because they “committed domestic violence.”
What has no place in it is the arrangement most of these families actually live in: a disabled veteran and the spouse who cares for them, both on the note, in the same house, still married. The occupancy rule reaches a family member only when the veteran is away. Eligibility itself is decided on one borrower and their residence. This is a finding about the program’s design, not about any one family’s file.
M26-4 Chapter 22 §§ 22.02 a.3, a.8, a.9, final, effective June 1 2026, searched in full · DOCUMENTED FACT, stated as a negative: the words are absent from the chapter
Interim authority · § 3737(h)
Congress gave VA authority to act before final rulemaking.
The law says VA can issue guidance now, without waiting. Section 3737(h) expressly authorizes administrative guidance in advance of regulations, notwithstanding any other provision of law. We have found no published § 3737(h) guidance.
38 U.S.C. § 3737(h) · DOCUMENTED FACT, with a stated negative: no published guidance located as of July 29, 2026
The statute also sets a ceiling, and it is dated to this cohort. H.R. 1815 carries a 30% partial-claim ceiling written specifically for families who fell behind between March 2020 and May 2025, the COVID forbearance and VASP cancellation window. The handbook criteria sit on top of a limit Congress had already scoped to these families. DOCUMENTED FACT Statutory text: 38 U.S.C. Chapter 37, Subchapter III.
The authority question · settled on the record.
The authority to help was expanded, not exhausted
You may have heard: “VASP was cancelled because it was illegal” →
The VA’s standing answer is that its hands are tied until regulations issue. The statute says otherwise, and the program the Department is running right now proves it.
In November 2025, Congress expanded the Secretary’s emergency authority to help veteran families before regulations issue. Pub. L. 119-37 (§7307(e)) removed the requirement that a loan have been in default on the day H.R. 1815 was signed: the Secretary may now issue administrative guidance for the Partial Claim Program and the required loss-mitigation options, “including any additional terms, conditions, and requirements the Secretary determines necessary.”
38 U.S.C. §3737(h), as amended · 139 Stat. 651 · S019 (C014)
The program running today operates under exactly this authority: VA’s June 1, 2026 handbook policy is pre-regulation guidance invoking the Secretary’s §3737 discretion.
M26-4 Ch. 22 · S006 (C015)
The 180-day runway families are waiting out was the mortgage industry’s own request. In March 2026 comment letters, the Mortgage Bankers Association and the Community Home Lenders of America each asked VA for at least 180 days before servicers had to comply. VA granted exactly that, 180 days from the June 1 publication, landing on November 28, 2026. In the same letter, MBA warned the draft would leave veterans with “substantially worse” options than Fannie Mae, Freddie Mac or FHA borrowers.
The Department cannot say it lacks authority to reach the families its eligibility barriers exclude. The authority exists, Congress broadened it, and VA is actively using it, for everyone except the families already harmed. The barriers are handbook choices, reversible without new legislation.
Grounded in H.R. 1815 and M26-4 Ch. 22 (C016)
A tax exemption a county granted, collected anyway
Two systems that do not talk, and a duty that sits with the servicer either way.
Washington reduces or removes property tax for qualifying disabled veterans and seniors under RCW 84.36.379 to .389. A county assessor grants it. No statute requires the assessor to notify the loan servicer, and nothing in the escrow calculation reads the county record.
DOCUMENTED FACT S186
Federal law requires the servicer to run an annual escrow account analysis and sets out how, at 12 CFR 1024.17(c), and governs shortages and surpluses at 1024.17(f). An analysis built on the non-exempt tax figure collects at the non-exempt rate every month, and an account drawn down faster than projected then produces a shortage, which raises the payment again.
DOCUMENTED FACT S185
Two failures are commonly merged and are not the same. An exemption granted and never applied is a servicing failure. An exemption that lapsed and was not flagged is a different failure with a different remedy. A document that merges them produces one number that cannot be defended.
The duty follows the loan. The Fourth Circuit addressed the escrow obligation in Harrell v. Freedom Mortgage Corp., decided October 2, 2020, a published opinion. A transfer of servicing does not answer a complaint about escrow.
DOCUMENTED FACT S180
The mechanism is enforceable and has been enforced. Washington's Department of Financial Institutions has taken action against mortgage servicers over servicing conduct, and 12 CFR 1024.35 gives a borrower a written route that requires a response.
DOCUMENTED FACT S181 S182 S103
The homeowner-facing version of this mechanism, with the checks a family can run from their own statements, is at Check your escrow.
Losing the house can disqualify you
What made you need the help is what stops you getting it.
Congress wrote a short test for the Partial Claim Program. Three things. The loan is guaranteed under this chapter. It is on the borrower's primary residence. And the Secretary determines it "is in default or at imminent risk of default."
DOCUMENTED FACT S151
VA's servicer handbook, effective June 1 2026, lists ten. Seven of them appear nowhere in the law. Three of those seven turn on where a family stands today rather than on the loan itself.
- The servicer has not been notified of any pending or active foreclosure.
- The borrower is still the current legal owner of record.
- VA has not already paid COVID-era mortgage assistance on the loan.
A family that already lost the house fails all three. It fails them because it lost the house. The event that makes a family need the program is the event that takes them out of it.
PROJECT ANALYSIS S151
One of the three is only partly an agency addition, and saying so precisely is worth more than overstating it. The law does allow only one partial claim per loan, so the first part of that condition restates the statute. The parts extending it to COVID-era assistance do not appear in the law.
And one thing here is widely misread. The law names a window, March 1 2020 to May 1 2025. That window is not a reach-back for families already foreclosed on. It raises the ceiling on what VA may pay, from 25 percent of the unpaid balance to 30 percent, for loans that still qualify on every other count. It is a more generous cap, not a door back in. A document that treats it as a reach-back is reading it backwards.
DOCUMENTED FACT S151
Two other conditions in the handbook do come from the statute and should not be described as VA inventions: the primary-residence requirement and the requirement that the loan be in default or close to it. Both are in the law Congress passed.
Whether any of this can be used also depends on a calendar. The program opened for submissions in June 2026, and servicers have until late November 2026 to build it into their systems. Between those two dates, whether a family can reach the program at all depends on whether their own mortgage company has finished the work. The dates and what has been promised against them are on the watch page.
PROJECT ANALYSIS