VA’s new Loss Mitigation Waterfall takes effect November 28, 2026. For servicers, the deadline is important, but the real work is what happens before then.
DLS Servicing recently hosted a webinar led by Donna Schmidt on the new framework and the questions servicers should be thinking through as they prepare. The point of the conversation was not simply to read through a new policy. It was to talk about what happens when that policy reaches the servicing floor.
The new waterfall brings more structure to the VA loss mitigation process. It creates a defined progression of options for borrowers, including Special Forbearance, Repayment Plans, modifications, a VA Partial Claim, and, when home retention is no longer realistic, property-liquidation options.
That structure matters. But a waterfall does not solve a borrower’s problem on its own.
The Real Test Is Affordability
The central question in loss mitigation remains the same: can the borrower afford the proposed outcome?
That question is especially important in the current rate environment. A modification can be the right next step procedurally while still failing to create a payment the borrower can sustain. The new VA Waterfall includes a Partial Claim option intended to help address arrearages without automatically increasing the borrower’s ongoing payment, but eligibility is specific and the option is limited.
For servicers, that means the work is not just identifying an available option. It is evaluating the borrower’s circumstances, explaining the result clearly, and moving through the required process with consistency.
Implementation Is an Operational Exercise
The webinar also reinforced that implementation would touch far more than the loss mitigation team.
Collections and SPOC representatives need to understand how to talk about the available paths. Operations teams need clear workflows and controls. Compliance and quality-control staff need to know what must be documented. Servicing systems have to accommodate new treatment for deferred amounts, payoff requests, and required reporting.
Trial Payment Plans are a good example. They are intended to demonstrate affordability, but they also carry specific notice, timing, payment, and tracking requirements.
Start Before the Deadline
November 28 may still be weeks away, but that time will move quickly once teams begin mapping procedures, reviewing systems, training staff, and coordinating with third parties.
The servicers best positioned for a smooth transition will be the ones that use the time now to understand the framework and prepare their teams to execute it consistently.
The webinar covered detailed workflow considerations, borrower scenarios, and implementation questions that are not included in this public recap. DLS clients can access the recording and follow up with our team for additional guidance.
For questions about VA loss mitigation readiness or servicing support, contact us.