[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8647 Introduced in House (IH)]

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118th CONGRESS
  2d Session
                                H. R. 8647

 To amend title 38, United States Code, to authorize the Secretary of 
   Veterans Affairs to take certain actions to prevent or resolve a 
 default of a housing loan guaranteed by the Secretary, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 5, 2024

  Mr. Van Orden (for himself and Mr. Alford) introduced the following 
     bill; which was referred to the Committee on Veterans' Affairs

_______________________________________________________________________

                                 A BILL


 
 To amend title 38, United States Code, to authorize the Secretary of 
   Veterans Affairs to take certain actions to prevent or resolve a 
 default of a housing loan guaranteed by the Secretary, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``VA Home Loan Program Reform Act''.

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.

    Section 3732 of title 38, United States Code, is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1), by striking ``obligation'' 
                each place it appears and inserting ``loan'';
                    (B) in paragraph (2)--
                            (i) by amending subparagraph (A) to read as 
                        follows:
    ``(A) 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 
                        ``obligation'' 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).''; and
                    (C) in paragraph (5), by striking ``obligation'' 
                and inserting ``loan'';
            (2) in subsection (c)(10)(B)(i), by striking 
        ``forebearance'' each place it appears and inserting 
        ``forbearance''; and
            (3) by adding at the end the following new subsection:
    ``(d) The Secretary may prescribe loss mitigation procedures, 
including a mandatory sequence in which the holder of a loan guaranteed 
under this chapter shall offer loss mitigation options to veterans, to 
help prevent the foreclosure of any such loan.''.

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 ``Partial Claim Program'', under 
which the Secretary may make a partial claim, described in subsection 
(b), with respect to a loan guaranteed under chapter 37 of title 38, 
United States Code, if the Secretary determines that such loan is in 
default or at imminent risk of default.
    (b) Partial Claim Described.--A patrial claim described in this 
subsection is the purchase by the Secretary of a portion of 
indebtedness under the guaranteed loan, under which--
            (1) the borrower of the guaranteed loan enters into an 
        agreement under subsection (c);
            (2) the Secretary pays the holder of the guaranteed loan 
        the amount of indebtedness the Secretary determines necessary 
        to help prevent or resolve a default; and
            (3) the Secretary receives a secured interest in the 
        property, subordinate to the first lien guaranteed loan, 
        serving as collateral for the guaranteed loan.
    (c) Agreement Between Borrower and Secretary.--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:
            (1) If the borrower agrees to make monthly payments 
        beginning not later than one year after the date on which the 
        Secretary makes the payment under subsection (b)(2), 0 percent.
            (2) 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) 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.
    (e) Requirements of Loan Holder.--
            (1) Agent of secretary.--The Secretary may require the 
        holder of a loan guaranteed under such chapter who receives a 
        partial claim under this section to service the partial claim 
        as an agent of the Secretary.
            (2) Establishment of claim.--The Secretary may require the 
        holder of a loan guaranteed under such chapter who receives a 
        partial claim under this section to take any actions necessary 
        to establish the partial claim, including preparing, executing, 
        transmitting, receiving, and recording loan documents.
            (3) Compensation of holder.--The Secretary shall compensate 
        the holder of a loan guaranteed under such chapter who receives 
        a partial claim under this section appropriately, as determined 
        by the Secretary, for the services required of such holder 
        under this subsection.
            (4) Exercise of powers.--The Secretary may exercise the 
        authority of the Secretary under this subsection without regard 
        to any other provision of law not enacted expressly in 
        limitation of this section that would otherwise govern the 
        expenditure of public funds.
    (f) Default and Foreclosure.--
            (1) Default.--
                    (A) In general.--Notwithstanding section 3703(e) of 
                title 38, United States Code, an individual who 
                defaults under a partial claim made under this section 
                shall be liable to the Secretary for any loss suffered 
                by the Secretary resulting from such default, and such 
                loss may be recovered in the same manner as any other 
                debt due the United States.
                    (B) Reduction of entitlement.--In the event of 
                default by an individual under a partial claim made 
                under this section, the Secretary may reduce the 
                aggregate amount of guaranty or insurance housing loan 
                entitlement available to the individual under such 
                chapter.
            (2) Foreclosure.--Notwithstanding section 2410(c) of title 
        28, United States Code, an action to foreclose a lien held by 
        the United States arising under a partial claim made under this 
        section shall follow foreclosure procedures in accordance with 
        State or local law where the property involved is located.
    (g) Decisions by the Secretary.--
            (1) Sole discretion.--Any partial claim under this section 
        shall be made in the sole discretion of the Secretary and on 
        terms and conditions acceptable to the Secretary that are 
        consistent with this section.
            (2) Final and conclusive.--Any decision by the Secretary 
        under this section is final and conclusive and is not subject 
        to judicial review.
            (3) Affect on provision of benefits.--For purposes of 
        section 511 of title 38, United States Code, any decision under 
        this section shall not be treated as a decision under a law 
        that affects the provision of benefits.
    (h) Compliance.--
            (1) Processing payments.--The Secretary may establish 
        standards for processing payments under this section based on a 
        certification by a holder of a loan guaranteed under such 
        chapter that the holder has complied with all applicable 
        requirements established by the Secretary.
            (2) Audits.--The Secretary shall carry out, on a random-
        sampling basis, post-payment audits to ensure compliance with 
        all requirements described in paragraph (1).
    (i) Guidance With Respect to Certain Loans.--
            (1) In general.--With respect to a loan described in 
        paragraph (2), the Secretary may--
                    (A) before prescribing regulations, issue 
                administrative guidance regarding the making of a 
                partial claim relating to such loan; and
                    (B) establish, through such guidance, additional 
                requirements applicable to such a partial claim.
            (2) Loan described.--A loan described in this paragraph is 
        a loan that the Secretary determines was in default on the date 
        of the enactment of this Act.
    (j) Rule of Construction.--Nothing in this section shall be 
construed to limit the authority of the Secretary under subsections (a) 
and (d) of section 3732 of title 38, United States Code, as amended by 
section 2 of this Act.
    (k) Termination.--The Secretary may not make a partial claim under 
this section after September 30, 2026.

SEC. 4. STRATEGY OF THE SECRETARY OF VETERANS AFFAIRS REGARDING HOME 
              LOANS IN LIGHT 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 chapter 37 of title 38, 
United States Code, is not at a disadvantage, arising from the decision 
in Burnett v. The National Association of Realtors (4:19-cv-00332-SRB 
(W.D. Mo. Dec. 16, 2022)), 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.
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