VA Home Loan Program Reform Act · Introduced in House (2025-03-03)

119th CONGRESS 1st Session

To amend title 38, United States Code, to authorize the Secretary of Veterans Affairs to take certain actions in the case of a default on a home loan guaranteed by the Secretary, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES · March 3, 2025 · Sponsor: Mr. Van Orden · Committee: Committee on Veterans' Affairs

SEC. 2. Authority of the Secretary of Veterans Affairs to take certain actions in the case of a default on a home loan guaranteed by the Secretary

(a) In general

Section 3732 of title 38, United States Code, is amended—
- in subsection (a)—
  - in paragraph (1), by striking each place it appears and inserting loan;
  - in paragraph (2)—
    - (i) by amending subparagraph (A) to read as follows:
      - The Secretary may, under terms and conditions as determined by the Secretary—
        
        (i) pay the holder of a loan guaranteed under this chapter an amount necessary to avoid the foreclosure of such loan;
        
        (ii) require the holder of the loan and the veteran obligated on the loan to execute all documents necessary to ensure the Secretary obtains a secured interest in the property covered by the loan; and
        
        (iii) require the holder of the loan to take any actions necessary to carry out this paragraph, including preparing, executing, transmitting, receiving, and recording documents, and requiring the holder of the loan to place the loan in forbearance.
    - (ii) in subparagraph (B), by striking each place it appears and inserting housing loan; and
    - (iii) by adding at the end the following new subparagraphs:
      - (C)
        
        (i) Any decision by the Secretary under this paragraph is final and is not subject to judicial review.
        
        (ii) For purposes of section 511 of this title, any decision under this paragraph shall not be treated as a decision under a law that affects the provision of benefits.
      - (D)
        
        (i) The Secretary may establish standards for processing payments under this paragraph based on a certification by a holder of a loan guaranteed under this chapter that the holder has complied with all applicable requirements established by the Secretary.
        
        (ii) The Secretary shall carry out, on a random-sampling basis, post-payment audits to ensure compliance with all requirements described in clause (i).
  - in paragraph (5), by striking obligationand inserting loan;
- in subsection (c)(10)(B)(i), by striking each place it appears and inserting forbearance; and
  - 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 ) 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.
- by adding at the end the following new subsection:

(b) Relationship to other powers of Secretary

Section 3720 of such title is amended—
- in subsection (a), by striking Notwithstandingand inserting Except as provided in subsection (h), notwithstanding;
- by redesignating subsections (f) through (h) as subsections (e) through (g), respectively; and
  - The Secretary may not take any action under paragraph (2),(3),(4), or (5) of subsection (a) with respect to a loan guaranteed under this chapter before the completion of the sequence of mitigation options offered to the veteran to whom the loan is made under section 3732(d) of this title.
- by adding at the end the following new subsection (h):

SEC. 3. Partial Claim Program of the Department of Veterans Affairs

(a) Establishment

The Secretary of Veterans Affairs shall carry out a program, to be known as the , under which the Secretary may make a partial claim, described in subsection (b), with respect to a loan— Partial Claim Program
- guaranteed under of title 38, United States Code; chapter 37
- regarding the primary residence of the borrower; and
- that the Secretary determines is in default or at imminent risk of default.

(b) Partial claim described

A partial claim described in this subsection is the purchase by the Secretary of a portion of indebtedness under the guaranteed loan, under which—
- the borrower of the guaranteed loan enters into an agreement under subsection (c);
- the Secretary pays the holder of the guaranteed loan the amount of indebtedness, subject to subsection (d), that the Secretary determines necessary to help prevent or resolve a default; and
- the Secretary receives a secured interest in the property, subordinate to the first lien guaranteed loan, serving as collateral for the guaranteed loan.

An agreement under this subsection is an agreement by the borrower of the guaranteed loan to repay the Secretary the amount determined under subsection (b)(2) at the end of the period of such guaranteed loan, subject to the following annual interest:
- If the borrower agrees to make monthly payments beginning not later than three years after the date on which the Secretary makes the payment under subsection (b)(2), 0 percent.
- If the borrower does not agree to a repayment plan under paragraph (1), or fails to comply with such a repayment plan, 0.5 percent.

(d) Administration of partial claim

(1) Amount of claim
- The amount of a partial claim under this section with respect to a loan guaranteed under such chapter may not exceed 20 percent of the unpaid principal balance of the guaranteed loan on the date on which the partial claim is made.
(2) One partial claim per loan
- The Secretary may make only one partial claim per loan.
(3) Not an advance
- The Secretary may not structure a partial claim as an advance on a new loan guaranteed under such chapter.
(4) Application of claim
- A holder of a loan guaranteed under such chapter who receives a partial claim under this section with respect to such loan shall apply the payment first to arrearages, if any, on the guaranteed loan, which may include any additional costs (such as taxes, insurance premiums, or homeowner’s dues) the Secretary determines necessary to prevent or resolve a default.
(5) Authority to contract

SEC. 4. Strategy of the Secretary of Veterans Affairs regarding the effect of certain litigation

Not later than 90 days after the date of the enactment of this Act, the Secretary of Veterans Affairs shall submit to the Committees on Veterans’ Affairs of the Senate and House of Representatives a report on the strategy of the Secretary to ensure that a veteran who seeks to purchase a home with a loan guaranteed under of title 38, United States Code, is not at a disadvantage when attempting to secure representation by a real estate agent or broker. Such strategy may include amendments to section 36.4313 of title 38, Code of Federal Regulations. chapter 37

H.R. 1815

Table of contents

SEC. 1. Short title

SEC. 2. Authority of the Secretary of Veterans Affairs to take certain actions in the case of a default on a home loan guaranteed by the Secretary

SEC. 3. Partial Claim Program of the Department of Veterans Affairs

SEC. 4. Strategy of the Secretary of Veterans Affairs regarding the effect of certain litigation