Short title

This Act may be cited as the

VA Home Loan Program Reform Act

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.

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.

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.