[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3728 Introduced in Senate (IS)]

<DOC>






118th CONGRESS
  2d Session
                                S. 3728

To amend title 38, United States Code, to modify the administration of 
   housing loans of the Department of Veterans Affairs to prevent or 
       resolve default under such loans, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 1, 2024

 Mr. Tester (for himself and Mr. Brown) introduced the following bill; 
which was read twice and referred to the Committee on Veterans' Affairs

_______________________________________________________________________

                                 A BILL


 
To amend title 38, United States Code, to modify the administration of 
   housing loans of the Department of Veterans Affairs to prevent or 
       resolve default under such loans, 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 ``Veterans Housing Stability Act of 
2024''.

SEC. 2. MODIFICATION OF ADMINISTRATION OF HOUSING LOANS OF DEPARTMENT 
              OF VETERANS AFFAIRS TO PREVENT OR RESOLVE DEFAULT.

    (a) Powers of Secretary.--Section 3720 of title 38, United States 
Code, is amended--
            (1) in subsection (f), by striking ``forebearance'' and 
        inserting ``forbearance''; and
            (2) by adding at the end the following new subsection:
    ``(i)(1) Notwithstanding the provisions of any other law, including 
section 501(d) of this title, the Secretary may, in response to a 
national emergency declared by the President under the National 
Emergencies Act (50 U.S.C. 1601 et seq.), a major disaster declared by 
the President under section 401 of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (42 U.S.C. 5170), or a widespread 
and significant crisis as determined by the Secretary, take any of the 
following actions as the Secretary considers reasonably necessary to 
further the purposes of this chapter:
            ``(A) Impose a moratorium on the foreclosure of any loan 
        guaranteed, insured, made, or held by the Secretary.
            ``(B) Impose a moratorium on any possessory action arising 
        from the foreclosure of any such loan.
            ``(C) Impose a period of forbearance and establish related 
        requirements with respect to any such loan.
    ``(2)(A) No moratorium or period of forbearance may be imposed 
under paragraph (1) for more than 180 days unless the Secretary extends 
such moratorium or period of forbearance as provided in subparagraph 
(A).
    ``(B) The Secretary may extend a moratorium or period of 
forbearance imposed under paragraph (1), or any previous extension of 
such a moratorium or period of forbearance, if the Secretary, not fewer 
than 30 days before extending such moratorium, period of forbearance, 
or previous extension--
            ``(i) notifies Congress of the extension; and
            ``(ii) publishes notice of the extension in the Federal 
        Register.''.
    (b) Partial Claim Program.--Subchapter III of chapter 37 of such 
title is amended by inserting after section 3722 the following new 
section:
``Sec. 3723. Partial Claim Program
    ``(a) In General.--The Secretary may establish a program under this 
section, to be known as the `Partial Claim Program', under which the 
Secretary may make a partial claim with respect to a loan guaranteed 
under this chapter if the Secretary determines that such loan is in 
default or faces imminent default.
    ``(b) Partial Claim Defined.--In this section, the term `partial 
claim', with respect to a loan guaranteed under this chapter, means the 
purchase by the Secretary of a portion of indebtedness under the 
guaranteed loan, under which--
            ``(1) the Secretary pays the holder of the guaranteed loan 
        the amount of indebtedness the Secretary determines necessary 
        to help prevent or resolve a default;
            ``(2) the borrower of the guaranteed loan enters into a 
        noninterest-bearing loan agreement to repay the Secretary at 
        the end of the period of the guaranteed loan; 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) Administration of Partial Claim.--
            ``(1) Amount of claim.--The amount of a partial claim under 
        this section with respect to a loan guaranteed under this 
        chapter may not exceed 30 percent of the unpaid principal 
        balance of the guaranteed loan as of the date that the initial 
        partial claim is made.
            ``(2) Application of claim.--A holder of a loan guaranteed 
        under this 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.
            ``(3) No advance on loan guaranty.--The Secretary may not 
        structure a partial claim under this section as an advance on a 
        loan guaranty provided under this chapter.
            ``(4) Expenses.--Expenses related to a partial claim under 
        this section, including administrative expenses associated with 
        such partial claim, may not be charged to the borrower of the 
        guaranteed loan with respect to which the partial claim is 
        paid.
    ``(d) Requirements of Loan Holder.--
            ``(1) Agent of secretary.--The Secretary may require the 
        holder of a loan guaranteed under this 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 this 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 this 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.
    ``(e) Default and Foreclosure.--
            ``(1) Default.--
                    ``(A) In general.--Notwithstanding section 3703(e) 
                of this title, 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 this 
                chapter.
            ``(2) Foreclosure.--Notwithstanding section 2410(c) of 
        title 28, 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.
    ``(f) 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 this title, any decision under this section 
        shall not be treated as a decision under a law that affects the 
        provision of benefits.
    ``(g) 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 this 
        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).
    ``(h) Application to Certain Loans.--
            ``(1) In general.--With respect to loans described in 
        paragraph (2), the Secretary may--
                    ``(A) issue administrative guidance to make partial 
                claims relating to such loans available under this 
                section before prescribing regulations; and
                    ``(B) establish through such guidance additional 
                requirements applicable to such partial claims, which 
                shall include the prohibition under subsection (c)(4).
            ``(2) Loan described.--A loan described in this paragraph 
        is a loan that the Secretary determines was in default as of 
        the date of the enactment of the Veterans Housing Stability Act 
        of 2024.
            ``(3) Termination.--The Secretary may not accept a request 
        for a partial claim under this subsection after December 31, 
        2025.
    ``(i) 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 this title.''.
    (c) Civil Penalties.--Such subchapter is further amended by 
inserting after section 3723, as added by subsection (b), the following 
new section:
``Sec. 3724. Civil penalties with respect to loan holders
    ``(a) In General.--Any holder of a loan guaranteed under this 
chapter that knowingly and materially makes a false statement under 
section 3723 or 3732 of this title shall be liable to the United States 
Government for a civil penalty equal to the greater of--
            ``(1) two times the amount of the loss suffered by the 
        Secretary; or
            ``(2) another appropriate amount determined by the 
        Secretary, not to exceed $27,894.
    ``(b) Recovery.--A civil penalty under this section may be 
recovered in the same manner as any other debt due the United States.
    ``(c) Additional Charges.--In assessing a civil penalty under this 
section, the Secretary may charge administrative costs, fees, and 
interest, as appropriate, in a manner similar to the interest and 
administrative costs charged under section 5315 of this title.
    ``(d) Determinations.--All determinations necessary to carry out 
this section shall be made by the Secretary.''.
    (d) Procedure on Default.--Section 3732 of such title 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, upon such 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 conclusive 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.''.
    (e) Clerical Amendments.--The table of sections at the beginning of 
chapter 37 of title 38, United States Code, is amended by inserting 
after the item relating to section 3722 the following new items:

``3723. Partial Claim Program.
``3724. Civil penalties with respect to loan holders.''.
                                 <all>