119 HR 1815 IH: VA Home Loan Program Reform Act
U.S. House of Representatives
2025-03-03
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EN
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I
119th CONGRESS
1st Session
H. R. 1815
IN THE HOUSE OF REPRESENTATIVES
March 3, 2025
Mr. Van Orden 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 in the case of a default on a home loan guaranteed by the Secretary, and for other purposes.
1.

Short title
This Act may be cited as the “VA Home Loan Program Reform Act”.
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—
(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 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 VA Home Loan Program Reform Act) 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.”.
(b)

Relationship to other powers of Secretary
Section 3720 of such title is amended—
(1)
in subsection (a), by striking “Notwithstanding” and inserting “Except as provided in subsection (h), notwithstanding”;
(2)
by redesignating subsections (f) through (h) as subsections (e) through (g), respectively; and
(3)
by adding at the end the following new subsection (h):
“(h)
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.”.
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—
(1)
guaranteed under chapter 37 of title 38, United States Code;
(2)
regarding the primary residence of the borrower; and
(3)
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—
(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, subject to subsection (d), that 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 three years 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)

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
The Secretary may enter into a contract with an entity for service of a partial claim under this section. Such entity shall provide quarterly statements to the borrower.
(e)

Requirements of loan holder
(1)

Establishment of claim
The Secretary may require the holder of a loan, regarding which the Secretary makes 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.
(2)

Compensation of holder
The Secretary shall compensate the holder of such a loan appropriately, as determined by the Secretary, for the services required of such holder under this subsection.
(3)

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)

Effect 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, 2027.
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 chapter 37 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.