    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                      KITCHEN TABLE ISSUES: LOWERING COSTS
                        FOR VETERAN FAMILIES THROUGH THE
                             VA HOME LOAN PROGRAM

    =======================================================================

                                    HEARING

                                   before the

                      SUBCOMMITTEE ON ECONOMIC OPPORTUNITY

                                     of the

                         COMMITTEE ON VETERANS' AFFAIRS

                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                            THURSDAY, MARCH 26, 2026

                                   __________

                               Serial No. 119-53

                                   __________

           Printed for the use of the Committee on Veterans' Affairs

                     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                        Available via http://govinfo.gov
                                   ______

                     U.S. GOVERNMENT PUBLISHING OFFICE

    63-816                    WASHINGTON : 2026

                         COMMITTEE ON VETERANS' AFFAIRS

                         MIKE BOST, Illinois, Chairman

    AUMUA AMATA COLEMAN RADEWAGEN,       MARK TAKANO, California, Ranking
        American Samoa, Vice-Chairwoman      Member
    JACK BERGMAN, Michigan               JULIA BROWNLEY, California
    NANCY MACE, South Carolina           CHRIS PAPPAS, New Hampshire
    MARIANNETTE MILLER-MEEKS, Iowa       SHEILA CHERFILUS-MCCORMICK,
    GREGORY F. MURPHY, North Carolina        Florida
    DERRICK VAN ORDEN, Wisconsin         MORGAN MCGARVEY, Kentucky
    MORGAN LUTTRELL, Texas               DELIA RAMIREZ, Illinois
    JUAN CISCOMANI, Arizona              NIKKI BUDZINSKI, Illinois
    KEITH SELF, Texas                    TIMOTHY M. KENNEDY, New York
    JEN KIGGANS, Virginia                MAXINE DEXTER, Oregon
    ABE HAMADEH, Arizona                 HERB CONAWAY, New Jersey
    KIMBERLYN KING-HINDS, Northern       KELLY MORRISON, Minnesota
        Mariana Islands
    TOM BARRETT, Michigan

                           Jon Clark, Staff Director
                      Matt Reel, Democratic Staff Director

                      SUBCOMMITTEE ON ECONOMIC OPPORTUNITY

                     DERRICK VAN ORDEN, Wisconsin, Chairman

    JUAN CISCOMANI, Arizona              CHRIS PAPPAS, New Hampshire,
    ABE HAMADEH, Arizona                     Ranking Member
    KIMBERLYN KING-HINDS, Northern       MORGAN MCGARVEY, Kentucky
        Mariana Islands                  DELIA RAMIREZ, Illinois
    TOM BARRETT, Michigan                TIMOTHY M. KENNEDY, New York

    Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
    hearing records of the Committee on Veterans' Affairs are also
    published in electronic form. The printed hearing record remains the
    official version. Because electronic submissions are used to prepare
    both printed and electronic versions of the hearing record, the process
    of converting between various electronic formats may introduce
    unintentional errors or omissions. Such occurrences are inherent in the
    current publication process and should diminish as the process is
    further refined.

                             C  O  N  T  E  N  T  S

                                  ----------

                            THURSDAY, MARCH 26, 2026

                                                                       Page

                               OPENING STATEMENTS

    The Honorable Derrick Van Orden, Chairman........................     1
    The Honorable Chris Pappas, Ranking Member.......................     2

                                   WITNESSES

                                    Panel I

    Mr. Patrick Zondervan, Executive Director, Loan Guaranty Service,
      Veterans Benefits Administration, U.S. Department of Veterans
      Affairs........................................................     4

            Accompanied by:

        Mr. Terry Rouch, Assistant Director for Loan Policy and
            Valuation, Loan Guaranty Service, Veterans Benefits
            Administration, U.S. Department of Veterans Affairs

                                    Panel II

    Mr. Owen Lee, Co-Owner & Chief Executive Officer, Success
      Mortgage Partners, 2026 MBA Chair Elect, Mortgage Bankers
      Association....................................................    12

    Mr. Kurt Thompson, Owner & Broker, RE/MAX, Executive Committee
      Member, National Association of Realtors.......................    13

    Ms. Alys Cohen, Director of Federal Housing Advocacy, National
      Consumer Law Center............................................    15

                                    APPENDIX

                        Prepared Statements Of Witnesses

    Mr. Patrick Zondervan Prepared Statement.........................    25
    Mr. Owen Lee Prepared Statement..................................    27
    Mr. Kurt Thompson Prepared Statement.............................    31
    Ms. Alys Cohen Prepared Statement................................    34

                           Statements For The Record

    Auction.com Prepared Statement...................................    39
    National Association of Mortgage Brokers Prepared Statement......    43

                      KITCHEN TABLE ISSUES: LOWERING COSTS
                        FOR VETERAN FAMILIES THROUGH THE
                             VA HOME LOAN PROGRAM

                                  ----------

                            THURSDAY, MARCH 26, 2026

          Subcommittee on Economic Opportunity,
                        Committee on Veterans' Affairs,
                                 U.S. House of Representatives,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 3:37 p.m., in
    room 360, Cannon House Office Building, Hon. Derrick Van Orden,
    [chairman of the subcommittee] presiding.
        Present: Representatives Van Orden, Hamadeh, King-Hinds,
    Pappas, and Kennedy.

            OPENING STATEMENT OF DERRICK VAN ORDEN, CHAIRMAN

        Mr. Van Orden. The subcommittee will come to order. I will
    figure out how to use these buttons later.
        I want to thank everyone for being here today to discuss
    affordability for our men and women who have served in ways we
    can improve and modernize the U.S. Department of Veterans
    Affairs (VA) Home Loan Program. The purpose of this VA benefit
    is to assist veterans and servicemembers with living the
    American Dream by purchasing their first home. As always, I
    appreciate the nonpartisan approach to the subcommittee, my
    friendship with Mr. Pappas, Ranking Member Pappas. It is a
    something I really truly enjoy that we have a great working
    relationship.
        In Fiscal Year 2025, an estimated 528,340 veterans,
    servicemembers, and their families used the VA Home Loan
    Program, with 61 percent of VA guaranteed loans being used for
    the initial purchase. VA has guaranteed over 29 million loans
    in excess of $4 trillion since the 1940's. I will tell you
    what, the VA Home Loan Guarantee Program and the GI Bill are
    the two best programs the U.S. Government has ever developed.
    These impressive numbers represent millions of veterans, their
    servicemembers, and families who may not have otherwise
    achieved the American dream of home ownership.
        I am also proud user of the VA Home Loan Program myself,
    and I personally know the benefits and purpose of this program
    can bring to veterans and their families. This is a benefit
    that we must protect to ensure it unleashes economic
    opportunity for today and tomorrow's veterans.
        Last year I championed H.R. 1815, VA Home Loan Program
    Reform Act, that was signed into law by President Trump. I am
    looking forward to full implementation of this partial claims
    program that will put the VA Home Loan Program on par with
    other Federal home loans in terms of options to mitigate
    foreclosure. That is something that I know the timing of that I
    think it should have--probably should have been earlier. We
    talked about this with the Veterans Affairs Servicing Purchase
    (VASP) deal. This law helps fulfill a promise to those who
    protect us with their services and continue--with their
    service, excuse me, and can continue to do so today by
    providing a safety net to maintain home ownership. I am very
    proud of our legislation and grateful to President Trump for
    signing it into law.
        I know the VA is working with industry to implement this
    law and encourage them to work closely with industry so that
    the good work we have done with this law is not wasted in
    bureaucratic red tape. The enactment and implementation of this
    law is important, but the work is not done. I am currently
    working on a piece of legislation that would streamline the VA
    Home Loan Program by requiring VA to review and update their
    outdated Minimum Property Requirements (MPR) and barriers to
    entry into the appraisal process.
        We must find ways to eliminate the unnecessary
    administrative costs of the VA home loan and better align it
    with other Federal housing programs so that it remains the best
    benefit our veterans in today's volatile housing market. It is
    both a priority of mine, Chairman Bost, our Republican
    conference, and President Trump to ensure that housing is
    affordable for all, especially our veterans. Today we will be
    hearing from industry experts about how to do just that.
        I was happy to see the VA is taking a closer look at
    updating some of their minimum property requirements, but there
    is more work that needs to be done to streamline the home loan
    program and remove unnecessary bureaucracy getting in the way
    of veteran home ownership. I want today's discussion to be
    meaningful, respectful obviously, and with the end state of
    keeping housing affordable for our veterans, servicemembers,
    and their families.
        With that, I would like to yield to my very good friend,
    Ranking Member Pappas.

           OPENING STATEMENT OF CHRIS PAPPAS, RANKING MEMBER

        Mr. Pappas. Thank you, Mr. Chairman, for holding this
    session. I agree with you that the VA Home Loan Guarantee
    Program is one of the most important commitments that we can
    make to veterans. So essential, especially at this moment where
    we are dealing with a housing crunch all across our country.
        We know that housing prices, along with pretty much every
    other expense a family faces, like energy and groceries,
    continue to rise. As veterans spend more money at the pump and
    at the grocery store, they have less to spend on rent, their
    mortgage, or to save for a down payment. From what I hear
    constantly from my constituents, and I am sure this applies to
    all of my colleagues, too, affordability concerns are not a
    hoax. They are a huge concern of Americans. I am thankful that
    we are holding this hearing in recognition of that.
        When we are talking about how to make a VA Home Loan
    Program more affordable, we cannot forget that veterans are
    facing the same housing and affordability crisis that impacts
    all Americans, a situation we cannot address through minor
    fixes to the home loan program itself. For example, when most
    Americans talk about barriers to buying a home, they are
    talking about the down payment. We know for veterans, one of
    the greatest advantages of the Home Loan Guarantee Program is
    that no money that no money down option, so down payments are
    not an issue for a lot of veterans.
        When it comes to closing fees, VA already limits what
    lenders can charge veterans. Of course, we should be open to a
    discussion about how limiting fees even more can save in terms
    of veterans costs. However, it is important to make clear that
    up to two-thirds of the closing fees a veteran pays are to
    register the deed, homeowners insurance, escrow, and taxes,
    none of which this committee can influence.
        My point here is that focusing on issues like fees should
    not divert our attention away from the crux of the problem.
    That is why we need a whole of government approach to tackle
    the housing crisis, lower cost for veterans and all Americans,
    and put home ownership back within reach for everyone. We
    should explore comprehensive policies that would provide real
    savings, tangible affordability, and accessibility to home
    loans for veterans.
        We need to focus on legislative packages, like the updated
    Senate-passed 21st Century Road to Housing Act, which House
    leadership has yet to put to the floor for a vote. This
    bipartisan bill includes bills I helped introduce that would
    cut red tape to build more housing, strengthen assistance to
    middle class homeowners for improvements and repairs, and
    expand access to the VA Home Loan Program by ensuring veterans
    are made aware of the benefit during the loan application
    stage. The housing crisis requires an all hands on deck
    approach and we should be using every tool at our disposal to
    create the conditions to tear down red tape, build more
    housing, and lower prices.
        In my State of New Hampshire, we are moving in that
    direction. We have a First in the Nation Veterans Campus in
    Franklin, which is a partnership between the private sector,
    government, and the nonprofit community, funded with Federal
    dollars and providing critical housing for our veterans. We are
    empowering our nonprofit and Veterans Service Organizations
    (VSO) partners, including Harbor Care, that have stepped up to
    fill a need for emergency, transitional, and permanent housing
    for veterans.
        Based on the testimony we received and we will hear
    momentarily, perhaps there are ways to align VA along with
    other Federal agencies to put veterans on an equal footing with
    nonveteran home buyers. However, the benefits must outweigh the
    cost, especially if proposals will ultimately expose veterans
    to excessive risks. Rather than discussing slight changes to
    improve accessibility, let us also focus on what this hearing
    should be about: affordability and that big picture
    conversation about how to bring down costs and make life better
    for veterans and all Americans.
        I look forward to the testimony today and I yield back.
        Mr. Van Orden. The gentleman yields.
        Before I introduce the witness panel, I would like to
    recognize one of my constituents who is sitting in the
    audience. Jane, how are you? Thanks for coming very much. She
    works for Portage County and she does a fantastic job. Thank
    you so much for joining us today.
        I will now introduce the witness panel. Our first witness
    is Mr. Patrick Zondervan, executive director of Loan Guaranty
    Service at the Department of Veterans Affairs. Accompanying Mr.
    Zondervan is Mr. Terry Rouch, assistant director for Loan
    Policy and Valuation, Loan Guaranty Service at the Department
    of Veterans Affairs.
        I ask you two gentlemen to stand and raise your right hand.
        [Witnesses sworn.]
        Mr. Van Orden. You may be seated. Let the record reflect
    that the witnesses have answered in the affirmative.
        Mr. Zondervan, you are now recognized for 5 minutes to
    deliver your testimony on behalf of the Department of Veterans
    Affairs.

                     STATEMENT OF PATRICK ZONDERVAN

        Mr. Zondervan. Good afternoon, Chairman Van Orden, Ranking
    Member Pappas, and members of the subcommittee. Thank you for
    the opportunity to present information on several topics
    regarding the Department of Veterans Affairs' Home Loan
    Guarantee Program.
        Mr. Van Orden. Mr. Zondervan, is your microphone on?
        Mr. Zondervan. Yes. I will try to speak a little louder.
    How is that? Okay. Good afternoon, Chairman Van Orden, Ranking
    Member Pappas, and other members of the subcommittee. Thank you
    for the opportunity to present information on several topics
    regarding the Department of Veterans Affairs' Home Loan
    Guaranty Program. Joining me is Terry Rouch, assistant director
    for the VA Loan Policy and Valuation. My remarks will focus on
    a set of key issues that are both timely and significant to
    veteran home lending. These are also detailed in my written
    testimony for your reference.
        As the new executive director of VA Loan Guaranty Service,
    I have the distinct honor to lead the VA's Home Loan Program.
    The VA Home Loan Program is an earned benefit for veterans and
    servicemembers to obtain, retain, and adapt a home which truly
    recognizes their service to the Nation. As a veteran myself, I
    have personally leveraged the VA Home Loan Program more than
    once to secure stable housing for my family.
        Since 1944, VA has been helping veterans achieve the
    American Dream of home ownership. To date, VA has guaranteed
    more than 29 million home loans totaling over $4 trillion and
    there are more than 3.9 million active VA guaranteed loans. VA
    guaranteed home loans can be considered as one of the most
    useful VA benefits available to veterans and servicemembers and
    is a premier choice in opening the door to home ownership.
        VA home loans provide a great opportunity for the first-
    time veteran home buyers to purchase a home because of the
    following unique features on the VA Home Loan Program. One
    hundred percent financing with no down payment required.
    Exemptions from paying the VA funding fee for service-connected
    disabled veterans in receipt of disability compensation. Limits
    on certain costs lenders may charge a veteran for origination
    and administrative fees to 1 percent. Lower interest rates. No
    monthly private insurance premiums. Allowing seller concessions
    of up to 4 percent of the reasonable value of the home for
    items like prepaid escrow and paying off consumer debts. These
    cost-saving measures ensure that the VA home loan is an
    affordable option for veterans.
        Even in tight housing markets VA continues to see strong
    demand for the program. In Fiscal Year 2025, VA guaranteed more
    than 500,000 home loans, with more than 60 percent of those
    being new and first-time homeowner purchases.
        While the demand for the VA Home Loan Program is strong,
    housing affordability remains a valid concern for veterans as
    it does for buyers in the conventional market. With mortgage
    rates around 6 percent on average, housing prices remain
    elevated in many areas where property taxes, homeowners'
    association fees, home insurance costs, and other unexpected
    repairs continue to impact the overall cost of home ownership.
        VA continues to make efforts to modernize its origination
    system and increase automation to allow lenders to submit
    proposed loan information prior to closing and identify
    potential errors that may lead to costly corrective measures
    after the loan is closed.
        Earlier this month, VA launched an enhancement to the VA
    mobile app that now allows eligible veterans to view their
    certificates of eligibility from their mobile phones. Within
    the first week, more than 35,000 certificates of eligibility
    were downloaded from the mobile app.
        An often misunderstood component of the VA program is the
    VA appraisal process, which is designed to ensure the home
    meets safety, soundness, and livability standards for veterans.
    These minimum property requirements have frustrated many
    buyers, sellers, and real estate agents alike. Today, I would
    like to set the record straight and dispel a few myths about
    the VA appraisals for the committee.
        The first myth is that the VA appraisals take too long. As
    of February 2026, VA appraisals are taking on average 7
    business days to complete, which is equal to other conventional
    and Federal Government programs.
        The second myth is that the VA appraisals are a home
    inspection. VA appraisals are not a home inspection. The VA
    home loan appraisal is an opinion of fair market value. VA is
    developing several actions to reduce and simplify the minimum
    property requirements for appraisals outlined in VA Regulation,
    Handbook policies, and procedures. This month, VA updated the
    VA Lenders Handbook chapter 12 with the removal of several
    minimum property requirements to streamline the appraisal
    process.
        In conclusion, VA will continue to support the path to home
    ownership through the VA Home Loan Program, strive to modernize
    our systems, streamline processes, and expand communication and
    education efforts to improve the VA Home Loan Program for
    future veterans and their families.
        Mr. Chairman, thank you for the continued support of the VA
    Home Loan Program and for this opportunity to speak today. This
    concludes my testimony and I welcome any questions that you or
    other members of the subcommittee may have.

        [The Prepared Statement Of Patrick Zondervan Appears In The
    Appendix]

        Mr. Van Orden. Thank you, Mr. Zondervan. The written
    statement of Mr. Zondervan will be entered into the hearing
    record.
        We are now going to proceed to questioning. Please stick to
    the 5-minute rule.
        I now recognize Ranking Member Pappas for 5 minutes to
    question the witnesses.
        Mr. Pappas. Well, thank you very much for that testimony. I
    appreciate the steps that you are already taking to make things
    more efficient and to streamline processes. I think that is
    incredibly important and we always need to be thinking about
    how we can do things a little bit better.
        We hear a lot of comments from industry that the processes
    and standards for the VA Home Loan Program are different from
    other government lending programs, especially when it comes to
    the appraisal process and minimum property requirements. I
    understand the desire for these programs to be matched up
    across the board as it would be easier for industry and it
    would reduce misconnections among sellers and real estate
    agents that VA-backed loans are harder to complete or take long
    longer to get done, as you have addressed. I have to question
    the logic, though, that we should lower VA standards to meet
    everyone else instead of perhaps raising all standards for
    Federal Housing Loan (FHA) and U.S. Department of Agriculture
    (USDA) to match VA.
        I am wondering, does the VA Home Loan Program perform
    better than similar programs at other agencies? Is that
    partially credited to the kinds of protections that are in
    place for veterans that are purchasing a home?
        Mr. Zondervan. Thank you for that question, sir. The
    protections are very important because the veteran is our first
    priority. However, there are parts of our minimum property
    requirements that we can remove. Right now what we are doing is
    evaluating our policies and identifying any, you know, minimum
    property requirements that we can remove without compromising
    the additional features that we have to ensure that the safety,
    the soundness, and the sanitary conditions of the home remain
    in place.
        Mr. Pappas. Could you give folks some examples of ways that
    you feel like you could modify the property requirements in a
    way that would not hurt veterans or put them at risk?
        Mr. Zondervan. Certainly. Actually, I am going to defer to
    my colleague, Mr. Terry.
        Mr. Rouch. Thank you for that question. A lot of these are
    cosmetic in nature, so we are looking at some of the things
    that have been problematic over the years, such as chipped
    paint or peeling paint. Those are one of the ones that are out
    there. Hand railings, burglar bars, those type of things have
    been problematic, that while there are MPRs and other programs
    as well, VA has made those subject to in the past, and so those
    are the ones that we want to tackle.
        Mr. Pappas. You agree that there are certain minimum
    property requirements that you feel should stay in place as a
    means to protect veterans?
        Mr. Rouch. The whole purpose of minimum property
    requirements are safety, soundness, and sanitation. Those were
    the ones that we will be wanting to keep.
        Mr. Pappas. I appreciate that. Last year, the
    administration put an end to the VASP program, which we know
    offered veterans a low interest rate and refinances to avoid
    foreclosure. I am just wondering if you can say whether VASP
    prevented folks from getting foreclosed on and if that lowered
    the foreclosure rate for veterans.
        Mr. Zondervan. Thank you for that question. The VASP
    program did end. The Secretary decided to end it in May of last
    year. Our focus right now remains on implementing the partial
    claims program, which will now provide the additional option
    for veterans to----
        Mr. Pappas. Yes. While it was in place, can you speak to, I
    mean, the fact that there were thousands of veterans that were
    assisted. I assume for those veterans that that helped them
    prevent foreclosure and that kept the foreclosure rate lower
    across the board. Would you agree with that?
        Mr. Zondervan. I would say that the VASP program at the
    time did have options to help veterans who were facing
    foreclosure, yes.
        Mr. Pappas. Okay. Well, it is certainly borne out in the
    numbers that I have seen. Talking about partial claims, I mean,
    we are approaching a year since this was, you know, designed
    and passed by Congress. We are really eager to see this
    implemented. With VASP gone, I am wondering what happens to
    veterans who are still waiting for this to be stood up.
        Mr. Zondervan. Thank you for that question. There are other
    options before the partial claims rolls out. There are
    forbearance, special forbearance, modifications of the loans.
    Those options have always been available absent of the VASP
    program. We work closely with our servicers and the industry
    partners to ensure that when veterans reach a point of default,
    that they are offered all of the remaining options that are
    available until the partial claims program comes out.
        Mr. Pappas. We are seeing the foreclosure rate increase,
    and so I think time is of the essence here. I know you have
    been briefing staff. I am wondering if you can give us a
    clearer picture on the timetable for the rollout.
        Mr. Zondervan. Absolutely. Thank you for that question. Our
    goal is to have it available to the public in June of this
    year.
        Mr. Pappas. Okay. You have been through the comment period.
    I assume you have received significant comments from folks on
    the outside that would be, you know, working with veterans on
    loans. Can you characterize any of those comments and how long
    it is going to take to work through that, you will still be
    able to hit that June timeframe?
        Mr. Zondervan. Certainly. Thank you. We actually did
    something new with the VA. We used what is called a drafting
    table. It is different from comments through the regulatory
    process. We received well over 800 individual unique feedback
    items.
        Mr. Van Orden. The gentleman's time has expired.
        Mr. Pappas. I yield back.
        Mr. Van Orden. The gentleman yields back.
        The chair recognizes Representative Hamadeh from Arizona.
        Mr. Hamadeh. Thank you, Mr. Chairman. Mr. Zondervan, thank
    you for being here.
        As a veteran, myself and I represent Arizona's Eighth
    District, which is home to one of the fastest-growing veteran
    populations in the country, the median home prices in our
    communities are now topping $450,000. Young veterans fresh off
    Active Duty, they are trying to start families and put down
    roots in the State they defended, are being locked out, not
    because they lack discipline or drive, but because the VA Home
    Loan Program has failed to keep up with Arizona's skyrocketing
    cost of living and housing market.
        My first question is, Mr. Zondervan, my constituents in
    Arizona are getting slammed with what I call fee stacking. You
    know, lenders are charging the full 1 percent origination fee
    on VA loans, then piling on extra itemized charges for
    processing, underwriting, and others. That 1 percent is
    supposed to be all-in inclusive. It is meant to cover the
    lender's labor and overhead. Now, these sneaky add-on
    administrative fees are nothing but a cash grab and they need
    to be banned. Now, what is the VA doing right now to ensure our
    veterans are not paying twice for the same paperwork at
    closing?
        Mr. Zondervan. Thank you for that question. We look at
    data. Our systems evaluate data and if there is any evidence of
    misuse or inappropriate fees being charged, we do work with the
    lenders to recoup those fees back. If we receive complaints
    from veterans, we do a full file loan review. If we do find
    that there are overages and charges, those are actually paid
    back by the lender.
        Mr. Hamadeh. They get paid back to the veteran?
        Mr. Zondervan. To the VA because----
        Mr. Hamadeh. Now, right now the VA caps seller concessions
    at just 4 percent, as you know, now while FHA and USDA allow 6
    percent. In a red hot market like Phoenix, that 2 percent
    difference can sometimes be the difference-maker between
    winning and losing a home. Now, sellers see a VA offer and
    realize they are getting less help with closing costs and
    immediately choose the FHA buyer instead. Now, our veterans are
    getting squeezed out of the market they fought to protect. Now,
    does the VA support raising the seller concessions cap to 6
    percent to align with the other Federal agencies?
        Mr. Zondervan. Thank you for that question. Seller's
    concessions, it is kind of, you know, the higher you go on the
    seller's concessions, it can create some issues with cost
    because it is--what we have seen is that the lenders will--or
    the person selling the home, when you have higher concessions,
    that sometimes causes them to raise the price on the home. It
    does not necessarily help with affordability. That is one of
    the things that we are looking at. We will be glad to work with
    the committee to continue to look at that. We currently are at
    4 percent, but we do want to make sure that whatever decision
    we make, it will continue to protect the veteran and not cost
    them more down the road.
        Mr. Hamadeh. Yes, of course. I am about common sense. Right
    now, FHA, USDA are 6 percent. It seems to make sense to me to
    align the VA with FHA and USDA. My family is in real estate. I
    am very familiar with housing and I know the unintended
    consequences of that, what you are talking about. That is not
    what we are seeing. I would encourage you to go back to the VA
    and try to align that up with the FHA. Okay?
        Mr. Zondervan. I will be glad to take that into
    consideration.
        Mr. Hamadeh. Now, the VA has identified 436 counties across
    31 states that do not have enough certified appraisers to meet
    demand. The VA demands 3 to 5 years of experience for
    certification, while the FHA only requires 12 to 18 months.
    Now, that gap is forcing our veterans into longer wait times
    and much higher fees, sometimes $600 to $1,300 per appraisal
    versus just $400 to $700 on the FHA side. Is the VA willing to
    reduce its experience requirements to align with FHA standards
    and get more qualified appraisers into the pipeline?
        Mr. Zondervan. Thank you for that. We are absolutely
    willing to consider looking at our requirements and reducing
    those to help.
        Mr. Hamadeh. How are you doing that?
        Mr. Zondervan. I am working with my staff right now to
    determine the balance between what is required versus ensuring
    that the product that is delivered is still a quality product.
    I am looking forward to our modernization efforts, which will
    help us with the quality control of appraisals, which will then
    also help us reduce the requirements before a VA--before an
    appraiser can become part of the panel.
        Mr. Hamadeh. Yes, but it goes back to my previous question.
    We just got to align up with what FHA is doing. It seems like
    it is common sense to me, and I know it is common sense for our
    veterans as well. Thank you.
        Mr. Van Orden. The gentleman yields.
        The chair now recognizes Representative King-Hinds from the
    Northern Mariana Islands.
        Ms. King-Hinds. Thank you very much for your time today.
        Earlier there was a lot of focus on how do we make things
    better for our vets. I kind of want to just start off and get
    your thoughts on what has the VA done to modernize the home
    loan program in recent years.
        Mr. Zondervan. Thank you for that question. Part of our
    modernization efforts is what we call guaranteed remittance. It
    has four different parts where we use Application Programming
    Interface (API) to gather data and to be able to evaluate
    information. We have implemented our first part of that
    modernization 100 percent back in November 2024. We are about
    83 percent with the second API and about 34 percent with the
    third.
        Although our priority is partial claims right now, once we
    have partial claims implemented, we will continue to focus on
    getting guaranteed remittance to full production, as that is
    one of the things that our stakeholders have asked for and it
    is one of my priorities.
        Ms. King-Hinds. That is good to hear. Are you familiar with
    the Commonwealth of the Northern Mariana Islands (CNMI)?
        Mr. Zondervan. Somewhat.
        Ms. King-Hinds. Somewhat. You know, one of the challenges
    that we have out there, and I was reading the written submitted
    testimony of the second panel, the folks that are coming right
    behind you, and they were talking about shortage of housing
    available in general. Right. That is a challenge out here. That
    is not the challenge out in the Northern Mariana Islands. I
    think more outreach with regards to the programs that you
    provide needs to be done so that, you know, the vets out there
    know, right, that they have this opportunity and the ability to
    avail of this program.
        I think Abe has mentioned that Arizona, he has a lot of
    veterans who are living in Arizona. Well, we have the second
    highest enlistment rate per capita across any State or
    territory. You know, folks are coming back home and this
    program is incredibly useful. That is why I want to thank the
    chairman for taking the lead with me to sponsor the Heroes
    Owning and Materializing Equity (HOME) Act, which addresses or
    attempts to close in some of the gaps by explicitly requiring
    that the VA does an outreach to places like the CNMI.
        Ranking Member Pappas mentioned that, you know, the
    priority right now should be how do we make housing more
    affordable? I think it is the President's priority as well to
    make home ownership more affordable. What are you doing toward
    that effort?
        Mr. Zondervan. Thank you for that question. The VA Home
    Loan Program is already a fantastic program. It is the best
    option for veterans out there. I am willing to work with the
    committee if you have any legislative proposals that you would
    like for us to view or provide technical assistance. We do want
    to help make it more affordable, so any opportunities that
    there are, we will be glad to work with your committee and our
    stakeholders as well.
        Ms. King-Hinds. If you were to give a suggestion in terms
    of what policies are standing in the way to be able to open up
    that path, what would it be?
        Mr. Zondervan. Thank you for that question. I do not have a
    specific suggestion at this time. You know, our program, as I
    stated, has a lot of benefits already. If you have ideas on how
    we could make it better, we would welcome that and we will work
    with you.
        Ms. King-Hinds. All right. I yield back, Mr. Chairman.
        Mr. Van Orden. The gentlelady yields back.
        I now recognize myself for 5 minutes.
        Who writes the requirements for the--so I just want to talk
    a little bit about some of the stuff that Ranking Member Pappas
    was saying and also my Republican colleagues. About this
    appraisal thing, it is fascinating to me. How long is the
    residency for a family practice physician? It is 3 years. If
    you can do a residency to become a family practice physician in
    3 years, why would you take 5 years to be an appraiser? I am
    not trying to degrade appraisers. It is, you know, it is a
    great vocation. I just do not see, you know, 5 years is a very
    long time.
        It is not just the fact--and I understand the times for
    getting an appraisal, you are right, you know, they are
    generally on par. I have never had a problem with it. When you
    are talking about 5 years, that is 5 years of a bunch of
    different people doing essentially repetitive tasks. To me,
    that looks like another VA jobs program. You are paying for
    these other people to train them as an apprentice to look at
    paint chips and stuff like that. It just seems like a waste of
    time and money, and we cannot waste time and money anymore.
        Who writes these requirements? I mean, there is a bunch of
    people like, hey, let us pile on all these requirements to make
    it take a half a decade to become an appraiser? Who writes
    those?
        Mr. Zondervan. Thank you for that question. I fully agree
    with you. I am new to this program.
        Mr. Van Orden. I know.
        Mr. Zondervan. However, there is a lot of opportunity for
    us to reduce that 5-year significantly. I will be working on
    that with my staff. It is within my control to change that.
        Mr. Van Orden. It is. I am going to admit it, I knew the
    answer to that question before I asked it.
        One of the greatest slogans ever for advertising was Nike
    when they said, just do it. The Trump administration has taken
    that and they say, just do things. This is something that you
    can do. You are empowered by your position to do this, and it
    could really be significant. Very happy about that.
        Now, Ranking Member Pappas, I want you to understand that
    this is a bipartisan thing. You had three people talking about
    this. I am not happy at all with the fact that it is going to
    be June before partial claims is done. That timeline is too
    long. You know what Chris' concerns are absolutely valid. We do
    not want veterans getting booted out of their homes. Right? I
    want you--I do not know if you can say yes right now, but I
    want to talk to you later about this. I want to guarantee that
    you are not going to foreclose on any single veterans if you
    have the ability to do so until this partial claims gets done.
    Okay? If that is in your power, I need to know that. Then I
    want your word if you can do that.
        That is really all. Chris, do you want to do a second
    round? Do you have more questions?
        Mr. Pappas. I think I am good.
        Mr. Van Orden. You guys good? Okay. Well, very well. With
    that, I am going to yield back because my buddy has got all the
    questions.
        Thank you very much for coming, gentlemen. You are excused.
    I hope you stick around and listen to the second panel.
        Please be seated. We will have you stand up in a sec.
        Our second panel, we are going to hear from the following
    witnesses. Our first witness is Mr. Owen Lee, 2026 chair-elect
    of the Mortgage Bankers Association (MBA). Our next witness is
    Mr. Kurt Thompson, executive committee member at the National
    Association of Realtors (NAR). Our final witness is Ms. Alice--
    is it, Alice? Alys, that is a very neat name, Cohen, director
    of Federal Housing Advocacy at National Consumer Law Center
    (NCLC).
        I would like to welcome you very much to the table, and I
    ask now that you would stand and raise your right hand. Sorry.
    You are very eager. That is great.
        [Witnesses sworn.]
        Mr. Van Orden. All right. Thank you very much. Let the
    record reflect that the witnesses have answered in the
    affirmative.
        Mr. Lee, you are now recognized for 5 minutes to deliver
    your testimony.

                         STATEMENT OF OWEN LEE

        Mr. Lee. And members of this subcommittee, thank you for
    the opportunity to testify today on behalf of the Mortgage
    Bankers Association. My name is Owen Lee. I serve as the MBA's
    2026 chair-elect and I am also chief executive officer of
    Success Mortgage Partners (SMP). I have more than 30 years of
    experience in residential real estate finance as an independent
    mortgage banker.
        I founded Success Mortgage Partners, headquartered in
    Plymouth, Michigan, in 2002. Our firm originates mortgages in
    43 states and the District of Columbia, closing billions of
    dollars of loans every year. Today, SMP is a top 100 VA lender.
    Since 2020, we have closed between 100-and $220 million loans
    each year. I am proud that over the last 6 years SMP has helped
    more than 3,100 veteran families secure the dream of home
    ownership.
        Many of those VA loan closings have been memorable,
    especially one very close to me. It involved my cousin, retired
    Sergeant First Class Damien Siwik. Sergeant Siwik is a 22-year
    Army veteran and recipient of the rarely received Soldier's
    Medal, one of the highest honors a soldier can receive for an
    act of valor in a noncombat situation. During his Army service,
    he completed multiple tours of duty on the Demilitarized Zone
    (DMZ) in Korea and then Honduras, Egypt, Iraq, and Afghanistan.
    He retired from the Army nearly 10 years ago.
        As a soldier, my cousin never lived in a singular posting
    for more than 3 years. He made the achievement--this made the
    achievement of home ownership quite difficult. Sergeant Siwik
    was also judged 70 percent disabled upon his discharge due to
    circumstances directly related to his service. It was with
    immense pride that on January 17th of 2025, I helped my cousin
    become a homeowner for the first time at age 58.
        The MBA is honored to have productive working relationships
    with the full House Veterans' Affairs Committee and this
    subcommittee, including your highly professional staff. I want
    to highlight a few of MBA's recommendations to strengthen and
    improve the VA Home Loan Program. More details can be found in
    my written testimony.
        I appreciate the full committee passing H.R. 1815, the VA
    Home Loan Program Reform Act, which last year created a
    practical and permanent partial claim program, aligning with
    existing programs across other Federal housing agencies. This
    law ensures veterans are not left behind during moments of
    financial stress. MBA commends the VA for their transparent and
    open drafting table process to implement the new Partial Claim
    Authority, but would encourage the agency to improve their
    draft waterfall proposal in the following ways.
        A borrower should not have to agree to a monthly payment
    increase before receiving other home retention options that do
    not result in a payment increase. It is also important for the
    policy to explicitly allow servicers the option to offer
    regular forbearance so a veteran homeowner does not have to
    commit to a repayment option before their hardship has ended
    up.
        Beyond the partial claims implementation, MBA would also
    encourage the VA to make certain other programmatic changes.
    Among a list included in my written statement: to align minimum
    property requirements with Fannie Mae and Freddie Mac; to
    reform the Interest Rate Reduction Refinance Loan (IRRRL)
    program to improve its effectiveness and assure ensure it
    reflects today's mortgage market; to modernize the allowable
    fee schedule structure that VA mortgage servicers can charge to
    process an assumable loan; and to align the agency's fee
    documentation requirements with how third-party services are
    actually billed and documented.
        I would be remiss if I did not mention that MBA stands by
    its traditional position that the use of any revenue generated
    by VA home loan funding fees should only be used for the
    benefit of the VA's Home Loan Program itself.
        In closing, I want to thank the committee for its time and
    attention on ways to reduce costs and improve efficiencies with
    this vital program, ensuring it better serves veteran families
    as they pursue their slice of the American Dream, and I look
    forward to answering any questions you may have.

        [The Prepared Statement Of Owen Lee Appears In The
    Appendix]

        Mr. Van Orden. Thank you, Mr. Lee. The written statement of
    Mr. Lee will be entered into the hearing record.
        Mr. Thompson, you are now recognized for 5 minutes to
    deliver your testimony.

                       STATEMENT OF KURT THOMPSON

        Mr. Thompson. Thank you, Chairman Van Orden, Ranking Member
    Pappas, and distinguished members of the subcommittee. My name
    is Kurt Thompson and I am the broker owner of RE/MAX Liberty in
    Westminster, Massachusetts, where I have been helping buyers
    and sellers for over 29 years. I am testifying today on behalf
    of the more than 1.4 million members of the National
    Association of Realtors. I am also a veteran. I served for 8
    years with the Army Reserve and one of the 157th Air Refueling
    Wing in New Hampshire's Air National Guard.
        The VA Home Loan Program helped me to achieve home
    ownership, which is why, as a standard practice, I ask every
    buyer whether they have VA eligibility. I know from my own
    experience that the no down payment feature can be the
    difference between owning a home or continuing to rent.
        Before I turn to where I think the program can be
    strengthened, I want to thank this subcommittee for its
    leadership in passing H.R. 1815. This legislation will help
    ensure our Nation's veterans utilizing the VA benefit have
    access to professional representation when making one of the
    most important decisions of their lives.
        That said, even the strongest loan benefit can only do so
    much when the availability of homes is in such short supply.
    NAR research estimates that Americans face a shortage of almost
    5 million homes in my market. In Massachusetts, most entry
    level buyers are looking in the 300,000 to 500,000 range and
    there simply are not enough homes at that price point. The
    ability for veterans to purchase with no down payment is VA
    loan program's greatest strength, and it is most meaningful
    when affordable homes are within reach.
        Strengthening the benefit and increasing supply are
    complementary goals, and both are essential. This is why NAR
    strongly urges Congress to pass the 21st Century Road to
    Housing Act, H.R. 6644, and the More Homes on the Market Act,
    H.R. 1340, which will unlock existing inventory by modernizing
    the capital gain exemption.
        Turning to the program itself, I want to spend most of my
    time on appraisals because that is where I see the issues most
    clearly in my day-to-day work. The biggest competitive
    challenge I see with VA buyers is closing costs leading to
    appraisal risk. Many of my veteran buyers have limited cash on
    hand, and closing costs largely cannot be rolled into the VA
    loan. This means that I often need to negotiate seller
    concessions. In a hot market like mine, sellers have a certain
    expectation of the amount of proceeds they will receive and
    from the sale of their property. To get the seller the number
    they need and secure the concession my clients need, the offer
    has to go above the asking price. As a result, the appraisal
    has to come in at that higher number. If it does not, the
    seller has to either take less or walk away. When they have
    another offer on the table without that complication, that is
    where veterans lose homes.
        Another issue I see is that property conditions are
    generally acceptable for conventional loans are required to be
    flagged by VA appraisers. These additional requirements can add
    time and cost or even kill purchases, giving sellers yet
    another reason to favor conventional or cash offers. NAR
    recommends Congress direct VA to align its minimum property
    requirements with Government Sponsored Enterprises (GSE)
    standards, modernizing appraisal timelines, and expand the
    appraisal pool.
        Beyond appraisals, there is another issue that represents
    real untapped potential, which is loan assumptions. VA loans
    are assumable, which in today's high interest rate environment
    sounds like an incredible feature. A buyer can take on a
    seller's 2.5 or 3 percent mortgage instead of borrowing at
    today's rates, which would have significant impact on the
    monthly payment. However, I cannot think of a single
    transaction in my career where an assumption is actually
    closed. The process can take up to 90 days or more, and most
    buyers cannot bridge the equity gap in cash.
        The assumption benefit exists on paper, but in practice it
    rarely pencils out. NAR recommends VA reevaluate the cap on
    lender compensation and that Congress explore financing
    solutions to close the equity gap. Congress should also address
    veterans losing their entitlement when a nonveteran assumes
    their loan.
        The VA Home Loan Guarantee Program has been one of the most
    important benefits our Nation offers and I am proud to have
    benefited from it personally. When it works well, it is a
    powerful path to achieving the American Dream of home ownership
    and the kind of wealth-building that can last generations. This
    program deserves to be the best it can be and NAR stands ready
    to work with this committee and VA to make that happen.
        I thank you for your time and I welcome your questions.

        [The Prepared Statement Of Kurt Thompson Appears In The
    Appendix]

        Mr. Van Orden. Thank you, Mr. Thompson. The written
    statement of Mr. Thompson will be entered into the hearing
    record.
        Ms. Cohen, you are now recognized for 5 minutes to deliver
    your testimony.

                        STATEMENT OF ALYS COHEN

        Ms. Cohen. Thank you. Chairman Van Orden, Ranking Member
    Pappas, and members of the subcommittee, thank you for the
    opportunity to testify on behalf of the low-income clients of
    the National Consumer Law Center regarding the VA Home Loan
    Guarantee Program. I am Alys Cohen, director of Federal Housing
    Advocacy at NCLC, and the daughter of a proud Air Force
    veteran. We support the goal of promoting affordability for
    veteran homeowners and we recognize the key role of the VA Home
    Loan Program. Today I will address the key tool VA has to make
    veteran home ownership more affordable, improving its hardship
    options, and I will discuss several issues relating to VA
    lending policies, all of which would have limited effect on
    today's affordability crisis, in great part because those
    challenges are marketwide.
        The most important step the VA can take to promote
    affordability for veterans is to help them retain their homes
    when feasible and avoid devastating home loss when they face
    financial hardships, including those related to their service.
    These home retention programs keep kids in school, stabilize
    neighborhoods, prevent home equity loss, and allow veterans to
    avoid an unforgiving rental market. However, the mortgage
    relief options available for veteran borrowers remain less
    favorable than the options available to other borrowers with
    federally backed mortgages, and a higher share of veteran
    borrowers are moving to active foreclosure.
        The situation for delinquent VA borrowers should improve
    due to passage of the VA Home Loan Program Reform Act, and we
    thank members of this committee for your leadership on that
    legislation. However, the newly authorized partial claim
    program has not yet begun and VA's draft handbook proposals do
    not fulfill the promise of the legislation, especially with
    respect to affordability, primarily because the agency's
    proposal requires a homeowner to accept up to a 15 percent
    increase in their monthly payment before accessing the partial
    claim. Of the roughly 90,000 VA borrowers who are seriously
    delinquent on their loan today, we estimate that over 30,000
    will face a payment increase under this approach, which on
    average would raise their monthly payment by $150 per month.
        VA includes other options that create more affordable
    payments, but these are not offered until later in the draft
    waterfall. We sincerely appreciate the fact that VA placed its
    proposed waterfall on the drafting table for comment. We are
    hopeful that VA will make changes as a result of the consistent
    feedback it has received to change the order of its waterfall
    to prioritize affordability.
        The VA's proposal, while understandably seeking to be
    sensitive to the need to limit term extensions and total
    amounts due, is out of step with Fannie Mae, Freddie Mac, and
    FHA, which only consider payment increases as a last resort, if
    at all. To promote affordability truly, VA should ensure that
    veteran borrowers have options that promote affordability
    first, which will save money for the VA fund, veteran
    borrowers, and mortgage servicers.
        In addition, we urge the VA to adopt measures to hold off
    foreclosures until the partial claim program becomes widely
    available. We have suggested full pay forbearance, which would
    allow servicers to accept monthly payments again for veterans
    who can resume payments. This would meet the goal that the
    chairman just expressed about stopping foreclosures until the
    new program is up and running.
        Aside from adjustments to its home retention program, the
    other steps VA could take will only help affordability around
    the edges at best or would seek to address issues not within
    VA's control. The problems of housing supply and overall market
    affordability are problems for all home buyers and mortgage
    borrowers.
        The VA's appraisal and minimum property standards ensure
    the soundness of the homes veterans purchase and catch faulty
    appraisals. Any change should be first examined for fair
    lending compliance and any needed additional system
    accountability. Any steps the agency takes on underwriting
    should avoid changes that could undermine loan performance or
    unnecessarily narrow program access. VA's unique underwriting
    guidelines with a focus on the borrower's residual income have
    led to an impressive track record. Any reductions in closing
    costs will be limited, if useful, and cannot have a significant
    impact on market-wide affordability issues. VA should also
    explore a small dollar mortgage loan pilot in coordination with
    FHA.
        Thank you for the opportunity to testify. We urge VA to
    stand up the partial claim, with a new waterfall, in a way that
    protects the fund, limits servicer burden, and stabilizes home
    ownership.

        [The Prepared Statement Of Alys Cohen Appears In The
    Appendix]

        Mr. Van Orden. The gentlelady's time has expired.
        The chair now recognizes Ranking Member Pappas for 5
    minutes.
        Mr. Pappas. Thanks.
        Mr. Van Orden. Oh, excuse me.
        Mr. Pappas. Go for it, Mr. Chairman.
        Mr. Van Orden. Ma'am, your written statement will be
    entered into the record.
        The chair now really actually recognizes Ranking Member
    Pappas. Thanks.
        Mr. Pappas. Well, thanks very much, Mr. Chairman. I
    appreciate everyone's testimony here today.
        Mr. Lee, your team testimony that was submitted to us, you
    said, ``Veterans today, just as in the early 1980's, face one
    of the most challenging housing affordability environments in
    decades, marked by elevated interest rates, limited inventory,
    and rising home prices.'' I am just wondering for all the
    witnesses here, you have touched on this, but can you stress
    what the major headwinds are facing buyers right now, Mr. Lee,
    if you can start?
        Mr. Lee. I think that the largest headwind facing buyers is
    supply. It is the supply of inventory of homes for sale. The
    supply of inventories of homes for sale is up in relation to
    where it has been since COVID, but it has never recovered in
    terms of there not being enough houses for sale.
        Obviously, we have a supply problem. The amount of homes
    that we used to build in this company--or country up to the
    Great Recession has never recovered from after the Great
    Recession. Anything that can be done in order to bring a
    greater supply of homes onto the market, building new and/or
    anything that can be done to get people to put more homes on
    the market, like the piece of legislation to modernize and step
    up the capital gains tax deduction for the sale of your primary
    residence, would help this situation quite a bit.
        Mr. Pappas. I see our realtors nodding. Anything else you
    want to add in terms of headwinds?
        Mr. Thompson. Absolutely. It is definitely inventory supply
    and shortage. We estimate there is about a 5 million home
    shortage. That translates to, roughly, if we could increase
    production by 400,000 units, it would take us easily 12 to 13
    years to catch up to demand. That is a big deal. There are
    provisions around the table. H.R. 1340 is one of those bills
    that can assist, as is H.R. 6644.
        Mr. Pappas. Thank you. Ms. Cohen.
        Ms. Cohen. Agree about supply. It is obviously a big issue.
    Prices are also quite high. Having institutional investors
    involved in the market is also making a home out of reach for a
    lot of people. It would be a mistake to only look at home
    buyers and not look at staying in the home. I would just add
    that once we get people into homes, we need to make sure that
    they can afford to stay in their homes. Thank you.
        Mr. Pappas. Well, thanks, Ms. Cohen. I was going to note in
    your written testimony you referred to that, saying the most
    affordable home is the one where they currently reside.
    Actually, Mr. Lee, you said that. Ms. Cohen, you said, ``The
    most important step that VA can take is to promote
    affordability for veterans and help them avoid unnecessary,
    devastating home loss when they face financial hardships.''
        I wanted to just ask about the end of the VASP program. I
    appreciate the chairman's comments about how we can stave off
    foreclosure for veterans that are anticipating this partial
    claims program coming online. Did the end of VASP negatively
    impact veterans in the VA Home Loan Program, and has it had any
    impact on the foreclosure rate overall?
        Ms. Cohen, I do not know if that is something you want to
    take.
        Ms. Cohen. We work with attorneys around the country who
    represent veterans and other borrowers with federally backed
    mortgages. After the VASP program was canceled, there were many
    homeowners who were facing hardship, who needed a solution that
    was just out of reach because the new program was not yet
    online. It has definitely pushed more people to the brink of
    foreclosure and home loss given that we have not had a program
    in this gap period.
        Mr. Pappas. Yes. Mr. Lee, any observations there?
        Mr. Lee. No, we just wanted to reiterate our thanks to
    everybody on this committee on both sides of the aisle for the
    help in getting the Partial Claims Act passed. We would commend
    the VA for their drafting table approach because that would
    promote a better solution faster, even though we would like to
    see it as soon as possible. I can promise you that our members
    and our servicing members are readying themselves to implement
    it as fast and professionally as possible as soon as we get it.
        Mr. Pappas. Yes. Mr. Thompson, thanks so much for your
    service through the New Hampshire Air National Guard. I should
    have led with that at the top. We appreciate what the Guard
    does for all Granite Staters. You talked about the disparity
    that can exist with veteran buyers and some of the challenges
    that they have with seller concessions and, you know, having to
    offer above asking price. How do we work to level that playing
    field?
        Mr. Thompson. Absolutely. One of the things that came up
    was increasing the concession from 4 to 6 percent. That would
    make a huge difference, in my opinion. One of the areas where
    we can streamline or make things more affordable for our
    veterans is when we are able to work with the seller to provide
    a concession toward those closing costs to minimize the amount
    of cash coming in.
        In terms of the minimum property requirements, that is a
    challenge as well. Many times veteran buyers take themselves
    out of contention even before they get to the point of offer,
    knowing that the property may not be in a condition that is
    going to pass those requirements. As good stewards of our
    veteran buyers, we do not want to walk them into landmines when
    resources may be limited. It is very important that we
    streamline those issues as well.
        Mr. Pappas. Thank you. My time is up, so I yield back.
        Mr. Van Orden. The gentleman yields back.
        The chair now recognizes Representative Hamadeh from the
    great State of Arizona.
        Mr. Hamadeh. Thank you, Chairman.
        Mr. Van Orden. You are welcome.
        Mr. Hamadeh. Mr. Lee, from the lender side of the table,
    where is the single biggest source of delay or added costs in
    the VA loan process as compared to conventional or FHA loans?
        Mr. Lee. Well, the MBA would like to see a modernization of
    both the appraisal standards and how appraisers are approved
    for the process. The MBA does believe that 5 years is too long.
    We would love to see something much closer to the way the rest
    of the market operates. A lot of states have adopted a 2-year
    period. That we think would be sufficient and that would speed
    along that process.
        Also, you know, as we have talked about, a modernization of
    the minimum property standards to bring it closer to where
    Fannie Mae and Freddie Mac are with the GSEs would definitely
    streamline the program.
        Mr. Hamadeh. Now VA still relies on manual underwriting,
    while FHA has moved to the semiautomated systems that can
    approve a loan in 2 to 7 days compared to the VA's roughly 10.
    Now, from an industry standpoint, what would automated
    underwriting do for VA loan competitiveness and for the
    veterans waiting on approvals?
        Mr. Lee. Automated underwriting does speed along the loan
    process, especially for the loans that are, you know, fit more
    right away into the box of underwriting where the underwriting
    is simple, the income is simple, so that would be helpful. We
    do not think it is the absolute major choke point of getting a
    VA loan approved as fast as possible.
        Mr. Hamadeh. Right. If it could speed it up by maybe 8 to 3
    days compared to FHA, that would make a big difference.
        Mr. Lee. It would make a difference and it would reduce the
    stigma that sometimes on a VA loan for the fact that it might
    be harder or take longer to get to the closing table. Sure.
        Mr. Hamadeh. I am all about just making it simple. You
    know, if FHA is doing something, I do not see why VA is taking
    a longer time. They are both Federal programs.
        Now, Mr. Thompson, I hear from veterans in Phoenix, Peoria,
    Surprise, Glendale, that there is a real stigma against VA
    loans in competitive housing markets. Listing agents falsely
    claim that VA loans take longer to close or have a higher
    denial rate when the data shows it is just the opposite. VA
    loans actually have the lowest denial rate of any loan type.
    Now, from your experience in the field, how pervasive Is this
    stigma and what can be done to educate the real estate
    community?
        Mr. Thompson. I think that it is a timeline issue. So many
    times when you are looking at a transaction, the appraisal
    comes in at a certain point after home inspections, purchase,
    and sales. When that is coming in, there is a potential for a
    property to have a risk exposure on those elements within the
    minimum property requirements, which require either a seller to
    take action and repair them, the consumer to take action or
    repair them, or the transaction could become terminal. There is
    an added risk over, say, a conventional or a cash purchase.
    Unfortunately, in the market, that can cause some challenges.
        Now, I can tell you, I had a client just a year and a half
    ago, they accepted the VA loan over a higher cash offer. There
    are still sellers out there that value the good work of our
    servicemen and women, and we will do the right thing, but we
    cannot rely on that. We need to try to streamline those
    programs to minimize friction for our veterans.
        Mr. Hamadeh. Yes, that is great. There are so many brave,
    patriotic Americans that are willing to support our
    servicemembers as well.
        Mr. Thompson. Absolutely.
        Mr. Hamadeh. I want to thank you all, and I yield back, Mr.
    Chairman.
        Mr. Van Orden. The gentleman yields.
        I now recognize myself for 5 minutes.
        Mr. Lee, you said something really interesting I thought
    was kind of--so right now, when we look at this waterfall, the
    VA is intending on making servicemembers who are having issues
    making their mortgage, the partial claim mandatory, out of the
    gate. Is that correct?
        Mr. Lee. I do not believe that is correct, but we would
    like to see some changes in the waterfall.
        Mr. Van Orden. Yes, we need to--I mean, we have the copy of
    it and all that stuff, but we need to--me and Chris got to sit
    down and look at this collectively and our staffs to make sure
    we agree with it. With Chevron deference, that finding, if it
    does not comport to our intent, then that rule will not stand.
    As opposed to having to undo something, I would prefer to make
    sure that we nail it, right, so let us, if it is cool with you,
    let us talk about that later to get, I mean, to really get down
    to brass tacks on this so we do not have to undo something that
    the administration does.
        Ma'am, Ms. Cohen, I want you to know that we were not,
    like, blowing you off. We are discussing the points that you
    were bringing up to make sure that we can have a really good
    discussion at the time. I appreciate you doing that stuff.
    There are some things that we do need to address about VASP and
    the reason that it went away is that the previous
    administration wrote what would have been an $18 billion check
    without congressional authorization. My concern is, and I
    stated this earlier, the two best programs that the U.S.
    Government has ever developed or the Veterans Home Loan
    Guarantee Program and the GI Bill. For someone to
    administratively decide that they can magically create an $18
    billion problem set without talking to us about it, directly
    contravenes the will of Congress.
        We do not want to see any veteran removed from their home
    ever. I do not want to see that happen. We have to make sure
    that we maintain the integrity of the program. Every single
    person in the future that wants to buy a home or is currently
    on Active Duty has the availability to use this program. That
    is the intent. That is why we did the partial claim thing, to
    align it with other Federal lending programs. I know that
    because we wrote it.
        There is one other thing.
        Ms. Cohen. Mr. Chairman, may I respond?
        Mr. Van Orden. Yes, sure, go ahead.
        Ms. Cohen. First of all, my father went to college on the
    GI Bill and he bought the house I grew up in with VA benefits.
        Mr. Van Orden. Right. You know what I am talking about.
        Ms. Cohen. I agree with you about that.
        Mr. Van Orden. Yes.
        Ms. Cohen. Second, I think the question right now is what
    can we do now before the partial claim is stood up so that
    people do not lose their homes between now and then.
        Mr. Van Orden. Yes.
        Ms. Cohen. You raised that issue yourself. We are
    suggesting something called full pay forbearance. People who
    can resume their payments, who will be able to qualify for the
    new system, should not be further behind because they did not
    have their payments accepted. We are suggesting that as a
    stopgap measure. It will stop them from falling further behind
    and prevent avoidable foreclosures.
        Mr. Van Orden. Can you explain, thank you for that, can you
    explain the having to accept a 15 percent increase in their
    mortgage?
        Ms. Cohen. The way the proposal works from VA, and it is my
    understanding that they have heard similar feedback and they
    are looking at it closely, is that the top options before you
    get to the payment, that would stay the same, or the partial
    claim, is that if you can qualify for a 30-year mortgage with
    an up to 15 percent payment increase, then you do not get to
    the next option and then you stay at that higher payment. I
    believe the goal of that was to not extend people's terms or
    total amounts due. What it gives people is an unaffordable
    payment that will lead to foreclosure.
        Mr. Van Orden. Okay. That is exactly why we need to really
    get into the weeds. Really, a hearing like this is not really
    the setting for that. That is sitting down and looking at these
    things in detail and preempting any issues that we may have
    ahead of time.
        Well, with that, I do not have any more questions. I want
    to thank you very much for coming today, and I appreciate your
    work. I know that your heart is exactly where ours is. That is
    making sure that every single man and woman that serves our
    Nation in uniform has the ability to live the American Dream,
    and that is home ownership.
        Oh, you know what? My time is expired. Do you mind if I
    just ask one more thing? Hey, how much money are you into
    building a home before you even break ground?
        Mr. Thompson. I am not qualified to ask that because it--
    answer that because it varies by location and the red tape of
    getting it through the local municipality.
        Mr. Van Orden. Boop.
        Mr. Thompson. There are a lot of things we can work on that
    together to streamline, and look forward to doing so.
        Mr. Van Orden. You nailed it, Mr. Thompson. It is somewhere
    around $100,000.
        Mr. Lee. Yes, we have been in a lot of meetings where I
    have heard between 70-and 95,000 or higher, depending upon
    where you are.
        Mr. Van Orden. You are buying a $200,000 home for $300,000
    because there is a whole bunch of people that got 6 bosses and
    want you to fill out 400 pieces of paperwork, right?
        Mr. Lee. Yes, sir.
        Mr. Van Orden. That is what we need to change. That is
    where your affordability comes in. Getting rid of these damn
    bureaucrats and paperwork and just do things. All right.
        Listen, God bless you guys. Thank you so much for coming. I
    appreciate it.
        Mr. Lee. Thank you, Mr. Chairman.
        Mr. Van Orden. I ask unanimous that all members may have 5
    legislative days to revise and extend their remarks, including
    extraneous material. Without objection.
        [Whereupon, at 4:39 p.m., the subcommittee was adjourned.]

    =======================================================================

                             A  P  P  E  N  D  I  X

    =======================================================================

                        Prepared Statements of Witnesses

                                  ----------

                    Prepared Statement of Patrick Zondervan

        Chairman Van Orden, Ranking Member Pappas, and other Members of the
    Subcommittee, thank you for the opportunity to appear before you today
    to discuss the Department of Veterans Affairs' Home Loan program.
    Joining me is Mr. Terry Rouch, Assistant Director for Loan Policy and
    Valuation, VBA.
        VA's home loan program enables private lenders to offer eligible
    Veterans and service members loans that are guaranteed by the
    Department, in many cases eliminating the need for a down payment and
    mortgage insurance and making home ownership much more affordable.
        Since the program's creation in 1944, VA has guaranteed more than
    29 million home loans totaling over $4 trillion dollars.
        This success is directly tied to VA's efforts to keep home loans
    affordable for Veterans. For example, VA limits the types and amounts
    of fees that lenders can charge, meaning Veterans can devote more
    resources to paying down interest and building equity. VA also strives
    to promote lower interest rates and administer the program so Veterans
    can take full advantage of up to 100 percent financing with no private
    mortgage insurance and a $0 down payment. VA continues to work to
    improve its Home Loan program to address market and affordability
    concerns.

    Reducing High Closing Costs

        VA-guaranteed loans are made by private lenders and are subject to
    prevailing market conditions. Aside from ensuring that statutory loan
    fees required under 38 U.S.C. Sec.  3729 are paid, VA does not set the
    financial terms or impose any specific closing costs on Veterans.
        VA does prescribe limitations, however, to protect Veterans from
    predatory lending and unreasonable or unnecessary costs. First, VA
    allows a Veteran to pay the actual costs for third-party services that
    are generally necessary for a home loan origination but only if they
    are reasonable and customary. These items include appraisals, recording
    fees, taxes, assessments, credit reports, hazard insurance, flood zone
    determinations, surveys, and title work.
        Since VA cannot dictate third-party prices, a Veteran's cost can
    vary widely based on locality and market trends. For example, a
    national credit bureau recently announced a price increase of 3 percent
    on mortgage credit reports, which followed a significant, earlier 50
    percent price rise. VA has no authority to limit a credit bureau's
    fees. If lenders have to pay the difference, they will find a way to
    pass those costs along (for example, through a higher interest rate).
        Second, unlike some other loan programs, VA limits the amount
    lenders can charge for processing and underwriting fees. VA has capped
    that amount at 1 percent of the loan amount. This restriction helps
    ensure that lenders can properly evaluate the loan from a credit and
    business perspective without subjecting the Veteran to predatory
    finance charges.
        Another way VA helps borrowers is by allowing unlimited seller
    contributions for closing costs. VA also permits seller concessions of
    up to 4 percent of the reasonable value for items like prepayment of
    the buyer's property taxes and insurance and paying off consumer debts.
    VA also spurs lower closing costs by allowing for the use of Attorney
    Opinion Letters as an alternative to obtaining a title insurance
    policy. This change allows for additional cost savings in localities
    where such letters are more affordable than title policies.

    Modernization of VA's Underwriting System

        Most credit underwriting efforts for VA-guaranteed loans are
    performed by private lenders rather than the Department itself. Lenders
    are required to apply VA's underwriting standards and guidelines when
    approving a loan. VA allows lenders to utilize Automated Underwriting
    Systems (AUS), such as Fannie Mae's Desktop Underwriter or Freddie
    Mac's Loan Prospector systems, to assist in the assessment of credit
    risk and the evaluation of the acceptability of the loan. VA does not
    require the use of an AUS and encourages lenders to holistically review
    loan applications and make VA-guaranteed loans available to Veterans
    based on a positive review of their individual credit profile.
        WebLGY is VA's web-based application system that helps facilitate
    the origination of VA-guaranteed home loans. WebLGY helps Veterans
    obtain a Certificate of Eligibility (COE), initiates appraisal orders,
    and processes Loan Guaranty Certificate requests. WebLGY connects with
    other external technology systems and applications, such as our
    automated appraisal management service, which analyzes thousands of
    business rules to ensure compliance with appraisal policies and
    quality.
        VA has made upgrades and continues to work on development of new
    functionality within our systems. For example, the Guaranty Remittance
    Application Programming Interface (API) will enable lenders to
    streamline part of their post-closing operations by avoiding the need
    to manually input data to obtain the VA Loan Guaranty Certificate. VA
    began development and released the first series of enhancements to
    WebLGY in 2023 and continues to make incremental strides toward full
    implementation of VA's end-to-end API technology solution.
        In 2023, VA launched ServiceNow, a cloud-based customer service
    management portal used by VA partners, such as lenders, servicers,
    appraisers, and Veterans, who can interact with VA Loan Guaranty 24
    hours a day, 7 days a week by submitting support tickets to receive
    answers to general loan questions, check loan status, or other issues.
        Other systems updates include the launch of our Program Participant
    Management system. This new, automated self-service tool released last
    year allows lenders to manage profiles, submit annual renewal requests,
    and staff registration. This month, VA launched an enhancement to VA's
    Mobile App to allow Veterans to view their COE from their mobile
    phones. In the first week, VA reports that more than 35,000 downloads
    of COEs were completed by using the mobile app.
        Last, the Veterans Affairs Loan Electronic Reporting Interface or
    VALERI, our loan servicing and administration system, is undergoing
    updates to accommodate the new Partial Claim program launching in the
    upcoming months.

    Competing in Tight Markets

        VA home loan demand remains strong in tight markets offering limits
    to the cost lenders charge Veterans at closing, as well as no down
    payment options and no private mortgage insurance. Veterans continue to
    use their home loan benefit amid increasing affordability strains
    experienced by buyers in today's housing market. VA purchase loan
    volume is up 4 percent year over year.
        VA notes that other factors may impact a Veteran's ability to
    become homeowners, as affordability extends beyond interest rates and
    the price of purchasing a home. The total cost of homeownership goes
    beyond the first payment and includes factors such as increases in
    property taxes, homeowners' association fees, insurance costs, and
    unexpected home repairs, or job-loss that impacts affordability.

    Improving the Appraisal Process and Minimum Property Requirements

        VA appreciates past feedback from Congress and strives to ensure
    our appraisal process is efficient and timely during the lifecycle of
    the appraisal order. VA closely monitors the quality, timeliness, and
    cost of these appraisal reports to serve the interests of Veterans,
    lenders, servicers, and VA. As of February 2026, average VA appraisal
    timeliness across the country is about 7 business days. Currently, VA
    is in the process of updating its appraisal fees in many areas of the
    country to ensure VA appraisal assignments remain competitive in the
    marketplace.
        Over the years, sellers and real estate agents have developed
    misperceptions about how VA appraisals work. While some issues were
    factual many years ago, and caused delays to the home buying process,
    many do not exist today.
        A common misperception is that a VA appraisal is a home inspection
    and that any identified minimum property requirements (MPR) issues
    would derail the homebuying process. To the contrary, the VA home loan
    appraisal is an objective, expert opinion on fair market value and is
    one of the most important tools in helping VA determine whether the
    Government and taxpayers should assume the risk of guaranteeing a
    portion of a Veteran's loan. The appraisal also helps identify major
    deficiencies concerning safe, sound, and sanitary conditions.
        However, VA agrees the appraisal is not a substitute for a home
    inspection and is committed to improving the appraisal process to help
    lessen the burden on Veterans. VA is developing several actions to
    reduce and simplify the MPRs outlined in VA regulations, handbook
    policies, and procedures. For example, VA recently updated the VA
    Lender's Handbook, chapter 12, with the removal of several MPRs, to
    streamline the appraisal process, while continuing work toward
    finalizing these changes. VA is also in the process of enhancing
    digital capabilities to better track the appraisal order from
    notification to acceptance, with improved analytics and communications.

    Conclusion

        VA will continue to serve the Nation's Veterans through the VA Home
    Loan program, which is centered around the unique needs of Veteran
    borrowers. Mr. Chairman, we will continue to provide Veterans with a
    safe and viable loan guaranty option, but more education is needed to
    dispel longstanding myths about the program and Veteran borrowers.
    Thank you for your continued support of our programs and for this
    opportunity to speak today.
        This concludes my testimony, and I welcome any questions that you
    or other Members of the Subcommittee may have.

                         Prepared Statement of Owen Lee

        Chairman Van Orden, Ranking Member Pappas, and members of this
    Subcommittee, thank you for the opportunity to testify today on behalf
    of the Mortgage Bankers Association (MBA).\1\ My name is Owen Lee, and
    I serve as MBA's 2026 Chair-Elect and Chief Executive Officer of
    Success Mortgage Partners (SMP). I have more than 30 years of
    experience in residential real estate finance as an independent
    mortgage banker (IMB).
    ---------------------------------------------------------------------------
        \1\ The Mortgage Bankers Association (MBA) is the national
    association representing the real estate finance industry, an industry
    that employs more than 275,000 people in virtually every community in
    the country. Headquartered in Washington, DC, the association works to
    ensure the continued strength of the Nation's residential and
    commercial real estate markets, to expand homeownership, and to extend
    access to affordable housing to all Americans. MBA promotes fair and
    ethical lending practices and fosters professional excellence among
    real estate finance employees through a wide range of educational
    programs and a variety of publications. Its membership of more than
    2,000 companies includes all elements of real estate finance:
    independent mortgage banks, mortgage brokers, commercial banks,
    thrifts, REITs, Wall Street conduits, life insurance companies, credit
    unions, and others in the mortgage lending field. For additional
    information, visit MBA's website: www.mba.org.
    ---------------------------------------------------------------------------
        I founded Success Mortgage Partners, headquartered in Plymouth,
    Michigan, in 2002. The firm is licensed to originate mortgages in 43
    states and the District of Columbia. SMP closes billions of dollars in
    mortgage loans every year. Over the course of my career, the firm has
    closed thousands of VA loans, averaging between $100 million and $220
    million in closings each year since 2020. Indeed, I am proud that over
    the last 6 years SMP has helped over 3,100 veteran families secure the
    dream of homeownership.
        Our firm is honored to be among the top 100 lenders - including
    banks, credit unions, and IMBs - in VA loan volume, originating and
    closing loans for those who have served our country. I am committed to
    making sure this benefit is available for veterans and service members
    for generations to come.
        Many of those loan closings have been memorable. For me personally,
    none more so than one that took place last November that involved my
    first cousin, retired Sgt. First Class Damien Siwik. Sgt. Siwik is a
    22-year Army veteran and a recipient of the rarely received Soldier's
    Medal, one of the highest honors a soldier can receive for an act of
    valor in a non-combat situation. During his Army service, he completed
    multiple tours of duty on the DMZ in Korea, as well as tours in
    Honduras, Egypt, Iraq, and Afghanistan. He retired from the Army almost
    5 years ago.
        As a soldier, my cousin never lived in a singular posting for more
    than 3 years. This made the achievement of homeownership quite
    difficult. Sgt. Siwik was also judged 70 percent disabled after his
    discharge due to circumstances directly related to his service. So it
    was with immense pride that on January 17, 2025, I helped my first
    cousin become a homeowner for the first time at age 58.

    Background

        MBA has enjoyed a long and productive relationship with the full
    Committee. We appreciated the opportunity to have fielded witnesses at
    the request of this Subcommittee five times since 2022 in support of
    needed policy changes to help strengthen the VA Home Loan Program. MBA
    appreciates the responsibility of serving as a leading voice for our
    veteran homeowners - and the lenders who work to provide affordable
    mortgage credit to them.
        MBA has also enjoyed a strong relationship with our partners at the
    VA Loan Guaranty Service. The VA Home Loan Program is (by design) among
    the most affordable and accessible mortgage programs given its unique
    ``no downpayment'' feature and limited upfront closing costs. These
    benefits have driven significant program growth in recent years with
    rapidly expanding loan volume for those who qualify for this
    benefit.\2\
    ---------------------------------------------------------------------------
        \2\ The number of active loans within VA's guaranty program has
    increased from 1.5 million loans in 2012 to nearly 4 million loans in
    2025, as noted in the related August 2025 press release here and
    January 2012 press release here. VA accounted for approximately 11
    percent of total originations, according to 2024 HMDA data (Data as of
    June 26th, 2025. Visit www.ffiec.gov/hmda for details on data
    exemptions and disclosures).
    ---------------------------------------------------------------------------
        In my statement today, I will emphasize the need for several
    programmatic improvements designed to support VA's core mission of
    promoting sustainable homeownership for veterans, along with ensuring
    its capacity is able to meet rising demand. MBA looks forward to
    working with this Subcommittee, the full Committee, and the VA to
    achieve these goals and help modernize the Home Loan program.

    Options to Improve Program Elements and Lower Costs for Veteran
    Families

    Partial Claim Implementation

        For many veterans, the most affordable home is the one where they
    currently reside. In March of this year, VA published two draft
    policies to update its loss mitigation ``waterfall'' and implement its
    partial claim program. MBA applauds the VA's use of the so-called
    ``drafting table'' approach to solicit stakeholder feedback on these
    two important policy changes that will help provide more options for
    distressed VA borrowers to stay in their homes.
        Together, those two policy changes will provide VA borrowers
    experiencing financial hardships with more options to retain their
    homes under a range of interest rate environments. However, aspects of
    this draft waterfall can still be improved. For example, a borrower
    should not have to agree to a monthly payment increase before receiving
    other home retention options that do not result in a payment increase.
    It is also important for the policy to explicitly allow servicers the
    option to offer regular forbearance, so a veteran homeowner does not
    have to commit to a repayment option before his/her hardship has
    ended.\3\
    ---------------------------------------------------------------------------
        \3\ Regular forbearance generally involves short-term agreements
    designed to pause payments to provide temporary relief for unexpected
    expenses or hardships (e.g., job loss), without commitment to a
    specific path for repayment. Under a special forbearance, the borrower
    and servicer agree to temporarily pause payments, but the borrower must
    commit ahead of time to either pay the full amount owed in one lump sum
    or use a repayment plan. This commitment can be difficult if a borrower
    does not know how long the hardship will last, such as the case of a
    borrower who lost their job and does not know when they will find new
    employment.
    ---------------------------------------------------------------------------
        Servicers understand the importance of getting these changes
    implemented as soon as possible. They know there are borrowers who
    could be helped by partial claims today, and that is why our
    association pushed so aggressively for the legislation granting VA
    authority to administer partial claims to be enacted as soon as
    possible.\4\ MBA applauds both the majority and minority Members of the
    Committee - and your staffs - on your work with the MBA and its VA Home
    Loan Program working group members on this important issue for our
    Nation's heroes.
    ---------------------------------------------------------------------------
        \4\ Public Law 119-31, or H.R. 1815, the VA Home Loan Program
    Reform Act of 2025
    ---------------------------------------------------------------------------
        While MBA and its members want the needed policies finalized
    quickly, there are critical changes the VA should make to those draft
    policies to make them more effective.\5\ We must balance a sense of
    urgency against the importance of allowing enough time to ensure a
    smooth rollout and prevent situations where borrowers might receive
    confusing communications about the timing and content of the options
    available to them. MBA looks forward to continuing to work with the VA
    to ensure that veterans are offered the best possible options to retain
    their homes.
    ---------------------------------------------------------------------------
        \5\ See MBA Comments: VA Draft of Partial Claim and Loss Mitigation
    Waterfall Changes here.

    ---------------------------------------------------------------------------
    Funding Fee Offsets

        MBA has consistently advocated for preserving the use of the VA
    funding fee to pay for home loan guaranty benefits only. Consequently,
    MBA's concerns regarding the funding offsets within H.R. 6047, the
    Sharri Briley and Eric Edmundson Veterans Benefits Expansion Act of
    2025, are consistent with our association's traditional position
    regarding the VA funding fee.
        Indeed, as far back as 1982, MBA expressed concerns regarding the
    ``proposed one-half percentage point `user-fee' for VA-guaranteed
    loans...[as] this fee could impose an additional financial burden upon
    veterans who wish to become homeowners at a time when record high
    interest rates already make this goal a difficult one.''
        MBA further opined at the time ``that if Congress chooses to impose
    a [funding] fee...these funds should be paid directly to the VA and
    targeted for use by the VA in the administration of the program...[as]
    MBA is most concerned that there will be no effort to match the user-
    fee paid by the veterans to the service provided and the expenses
    incurred under the VA home loan guaranty program.'' \6\
    ---------------------------------------------------------------------------
        \6\ U.S. Congress, House Committee on Veterans' Affairs,
    Subcommittee on Housing and Memorial Affairs, VA Home Loan Guaranty
    Program, hearing, 97th Cong., 2d sess., March 23, 1982, p. 108
    ---------------------------------------------------------------------------
        Our veterans today--just as in the early 1980's--face one of the
    most challenging housing affordability environments in decades, marked
    by elevated interest rates, limited inventory (in many markets), and
    rising home prices. Increasing mandatory fees on VA loans would
    disproportionately harm veteran households with modest incomes - many
    of whom rely on the VA program precisely because it offers lower
    upfront costs and no down payment requirement.
        Therefore, MBA fully supports the intent of the amendment in the
    nature of a substitute (ANS) to H.R. 6047 - to provide improved
    disability and dependency benefits for veterans and their survivors.
    However, the bill effectively funds those worthy benefit expansions by
    burdening other veteran homebuyers through higher mortgage fees.
    Homeownership is a foundational component of long-term financial
    stability - and it should not continue to be treated as a primary
    source of revenue to enable policy changes outside of the Home Loan
    program.
        As indicated prior to the markup of the legislation, MBA
    respectfully asks that this Subcommittee (and the full Committee) work
    to revise Section 3 to remove or substantially modify the proposed fee
    increases and extensions. MBA thanks the bipartisan leadership of the
    entire Committee for the open and collaborative dialog on this
    legislation to date - and would welcome the opportunity to continue
    working on solutions that preserve affordable access to the Home Loan
    Program.

    Appropriations/VA Staffing/ Technology

        Technology modernization and adequate staffing resources are
    essential to the timely development and implementation of policies that
    directly benefit veterans. Currently, limited staffing creates
    bottlenecks that slow the rollout of important policy updates,
    guidance, and program enhancements. While VA has demonstrated a strong
    willingness to engage with stakeholders and advance meaningful reforms,
    resource constraints can delay execution and limit the agency's ability
    to respond quickly to evolving market conditions. Providing sufficient
    staffing support would help ensure that key initiatives, such as
    updates to loss mitigation tools, appraisal policies, and origination
    frameworks, are implemented efficiently and consistently.
        At the same time, investment in modernization of the VA's existing
    IT systems is equally important. As the mortgage industry continues to
    evolve, the VA must be equipped with modern systems that can support
    updated policies, streamline processes, and improve communication with
    lenders and servicers. Without adequate technology investments, even
    well-designed policy changes can face operational challenges in
    execution. Enhancing the VA's technology infrastructure would help the
    agency keep pace with industry standards, reduce manual processes, and
    support more effective program delivery.
        MBA encourages this authorizing Subcommittee - and full Committee -
    to work with appropriators to support the necessary funding for the VA
    Home Loan Program to modernize its technology platform and deploy
    sufficient staff to meet the demands of its growing portfolio and the
    veterans the agency serves.

    Appraisal Standard Reforms - Minimum Property Requirements

        We also encourage the VA to implement several reforms designed to
    improve the program's competitiveness in a way that reflects today's
    housing market and practices. A notable example is the agency's
    appraisal standards. In 2023, the VA published an Advance Notice of
    Proposed Rulemaking on Minimum Property Requirements (MPR) in
    accordance with Public Law 117-308,\7\ which directed VA to consider
    updates to its appraisal and property standards framework.
    ---------------------------------------------------------------------------
        \7\ H.R. 7735--Improving Access to the VA Home Loan Benefit Act of
    2022
    ---------------------------------------------------------------------------
        MBA urges the VA to publish program guidance that aligns its
    property condition framework with the housing Government-Sponsored
    Enterprises (Fannie Mae and Freddie Mac) by replacing the current MPR
    structure with the Uniform Appraisal Dataset property condition
    ratings.
        Under this approach, appraisers would evaluate properties using the
    standardized scale (C1 through C6), with clear expectations tied to
    each rating.\8\ This structure would preserve appropriate safety-and-
    soundness safeguards while creating a clearer, more consistent, and
    operationally practical standard for lenders, appraisers, and
    borrowers.
    ---------------------------------------------------------------------------
        \8\ Minimum Property Requirements for VA-Guaranteed and Direct
    Loans (Docket: 2023-27068)
    ---------------------------------------------------------------------------
        To be more descriptive, updating the framework improves housing
    affordability and VA Home Loan Program competitiveness by reducing
    unnecessary repair conditions that can delay closings, increase costs,
    and discourage sellers from accepting VA offers. It also expands the
    pool of available appraisers by eliminating the need to navigate a
    separate, highly specialized VA property-standard framework, thereby
    increasing consistency and efficiency in the appraisal process. Both
    considerations will prove to be crucial should interest rates decrease.
        MBA looks forward to the opportunity to partner with the VA on a
    potential draft policy that updates its MPR guidance and collaborate
    with our real estate industry partners to improve VA's appraisal
    standards as market dynamics change.

    VA Proposed Revision to IRRRLs

        MBA also encourages the VA to implement targeted reforms to the
    Interest Rate Reduction Refinance Loan (IRRRL) program to improve its
    effectiveness and ensure it reflects today's mortgage market and
    operational realities, particularly with respect to recoupment
    calculations, net tangible benefit standards, seasoning requirements,
    and comparison disclosure processes. As the VA continues to implement
    statutory changes under the Economic Growth, Regulatory Relief, and
    Consumer Protection Act and the Protecting Affordable Mortgages for
    Veterans Act, it is important that program requirements align with how
    lenders originate and refinance loans in practice.
        MBA urges the VA to take the next step and refine its policies to
    provide greater clarity, consistency, and operational flexibility.\9\
    This includes aligning recoupment calculations to avoid borrower
    confusion, providing flexibility where a clear borrower benefit exists,
    and addressing requirements that rely on data lenders often cannot
    reasonably access, such as certain loan-level details needed for
    seasoning and disclosure calculations. These improvements would better
    align program requirements with real-world lending practices while
    maintaining appropriate consumer protections.
    ---------------------------------------------------------------------------
        \9\ Loan Guaranty: Revisions to VA-Guaranteed or Insured Interest
    Rate Reduction Refinancing Loans
    ---------------------------------------------------------------------------
        Modernizing these elements of the IRRRL framework will improve
    affordability and access for veterans by preserving the program's
    streamlined nature, reducing compliance uncertainty, and minimizing
    unnecessary operational burdens that can limit lender participation.
    Ensuring the program remains efficient and accessible will be
    especially important as interest rates change and more veterans look to
    refinance into more sustainable loan terms.

    Additional Policy Suggestions

        While updating the MPR framework is a critical step, it should be
    part of a broader effort to modernize the VA Home Loan program. Several
    additional policies by which actions from the VA can meaningfully
    improve affordability, streamline operations, and enhance the Home Loan
    Program's competitiveness in today's market are highlighted below:

          The VA should update its allowable fees servicers can
    charge to process assumable loans. Assumable loans create a unique
    opportunity for both veteran homeowners looking to sell their homes
    with a lower interest rate and those veteran home buyers who seek to
    obtain a home with a lower monthly payment. However, fees to process an
    assumption have only been nominally increased over the last three
    decades, resulting in lenders now losing money when they process an
    assumption because of the amount of meticulous underwriting needed to
    facilitate them. MBA encourages the VA to increase the amount of these
    allowable fees to facilitate more of these assumable loans - and
    encourage both the Congress and the agency to explore ways to cover the
    higher down payment needed to purchase a home with an assumable
    loan.\10\
    ---------------------------------------------------------------------------
        \10\ See MBA's Request for Increase of the Allowable Fee for
    Assumptions advocating for VA (and FHA) to increase their assumption
    fee up to $3,500 per assumption and set the allowable fee to be indexed
    periodically to inflation.

          The VA should update its fee documentation requirements
    to better align with how third-party services are billed and
    documented. Current expectations around borrower-level invoices do not
    reflect common industry practices, in which many vendors issue
    aggregated or bulk invoices. This creates operational challenges and
    inconsistent audit outcomes. Providing clear guidance on acceptable
    alternative documentation, like the approach adopted by FHA, reduces
    uncertainty, limits unnecessary post-closing findings and refunds, and
    also improves consistency across lenders and reviewers.\11\
    ---------------------------------------------------------------------------
        \11\ VA Invoice and Fee Itemization Requirement

          As a general matter, the VA should update its Lenders
    Handbook to incorporate and consolidate the numerous outstanding
    circulars issued in recent years, which have created a fragmented and
    sometimes inconsistent policy framework. Relying on standalone
    circulars makes it difficult for lenders and servicers to identify
    current requirements, increasing the risk of misinterpretation,
    compliance challenges, and inconsistent loan reviews. A comprehensive
    update would improve clarity, promote uniform application of VA
    policies, and reduce operational uncertainty across the industry.
    Ultimately, a modernized and fully integrated Handbook would enhance
    program efficiency, strengthen oversight, and better support lenders
    ---------------------------------------------------------------------------
    serving veteran borrowers.

    Conclusion

        Once again, MBA appreciates this opportunity to comment on the many
    complex components of the important VA Home Loan Program benefit
    offered to our Nation's heroes. Our association and its members look
    forward to working with this Subcommittee, the full Committee, the VA,
    and the full administration to serve as a resource while these
    important discussions continue.
        I look forward to answering any questions you may have.

                      Prepared Statement of Kurt Thompson

    Introduction

        Chairman Van Orden, Ranking Member Pappas, and distinguished
    Members of the Subcommittee, my name is Kurt Thompson. I am the Broker/
    Owner of RE/MAX Liberty in Westminster, Massachusetts, where I have
    been helping buyers and sellers for over 29 years. I am a Certified
    Residential Specialist, a past President of the Massachusetts
    Association of REALTORS, and the 2012 Massachusetts REALTOR of the
    Year. I am also a veteran. I served my country for 8 years, in the Army
    Reserve and later with the 157th Air Refueling Wing at Pease Air
    National Guard Base in New Hampshire. I am proud of that service, and I
    am proud to say that the VA home loan program helped me achieve
    homeownership. That experience gave me a personal appreciation for what
    this benefit means, and it is part of why I work hard to make sure my
    veteran clients know about the program and can access it.
        Today I am testifying on behalf of more than 1.4 million members of
    the National Association of REALTORS (NAR), representing every zip
    code in the United States, who thank you for the opportunity to present
    NAR's views on improving and modernizing the VA Home Loan Guaranty
    program. NAR is America's largest trade association, and our members
    engage in all aspects of the residential and commercial real estate
    industries, with agents and brokers in every congressional district in
    the country.
        NAR members work with veteran and active-duty homebuyers in every
    corner of this country, and we go above and beyond to serve them well.
    For example, NAR offers the Military Relocation Professional
    certification, which trains REALTORS to understand the unique needs of
    current and former servicemembers and their families, guide them
    through the relocation process, help them make informed decisions about
    whether to rent or purchase a home, and explain the basics of VA
    financing. For a veteran coming home after years of deployment or
    active service, the housing market they return to can look completely
    different from the one they left. Having a knowledgeable REALTOR in
    their corner can make the difference between getting into a home and
    losing the property. Someone who understands the VA loan program, knows
    how to structure an offer competitively, and can connect them with a
    lender who knows the program inside and out--that is what veteran
    buyers need. That is the standard of service NAR members strive to
    provide, and it is why we care so deeply about making sure the VA
    program itself works as well as it should.
        Part of my standard practice when working with any buyer is to ask
    whether they have VA eligibility, because if they do, that benefit is
    almost always their best financing option. The no-down-payment feature
    alone can be the difference between homeownership and continued renting
    for a veteran who is living paycheck to paycheck. When it works well,
    the VA loan program does not just put a veteran in a home, it helps
    them stabilize their housing costs and build multigenerational wealth.
    Helping a veteran reach that milestone is one of the most meaningful
    things I do in this job.
        The VA home loan program has the potential to be even stronger than
    it is today, and this Subcommittee has the opportunity to make that
    happen. That is what I am here to discuss.

    VA Home Loan Reform Act (H.R. 1815)

        Before turning to opportunities for improving veteran access to
    sustainable homeownership, NAR wants to express sincere gratitude to
    this Subcommittee for its leadership on one of the most important
    veterans housing reforms in recent memory: the passage of the VA Home
    Loan Reform Act (H.R. 1815).
        For years, veterans using VA-guaranteed home loans were the only
    homebuyers in America explicitly prohibited from directly compensating
    their real estate agent. As market practices shifted following the NAR
    settlement and sellers have become less willing to cover buyer agent
    fees, this put veterans in an increasingly difficult position: use
    their hard-earned VA benefit and risk going without professional
    representation or forgo the benefit altogether to level the playing
    field with other buyers.
        NAR worked with both this Subcommittee and the Department of
    Veterans Affairs to address this. The VA took the first step by
    temporarily suspending the prohibition in 2024, providing immediate
    relief. But veterans needed a permanent solution, and H.R. 1815
    delivered that. Passed unanimously and signed into law, the Act
    requires the VA to develop a lasting strategy to ensure veterans are
    not disadvantaged when seeking real estate representation. It also
    establishes a new partial claims program to help veterans who are
    struggling to keep up with their mortgage payments, ensuring the
    program supports veterans long after the closing table. NAR has been
    engaged with VA on implementation and looks forward to continuing that
    work as the agency develops its permanent solution. We thank this
    Subcommittee for its leadership in getting H.R. 1815 across the finish
    line.

    The Broader Context: America's Housing Affordability Crisis

        To understand the value of the VA program, it helps to first look
    at the housing market veterans are entering. Even the strongest loan
    benefit can only do so much when available homes are in such short
    supply.
        America faces a shortage of approximately 4.7 million homes. There
    were more homes available in 1995 than there are today, despite 75
    million more Americans. Fourteen years of severe underbuilding
    following the Great Recession left a massive shortfall that we're still
    nowhere close to closing. The scarcity of affordable home inventory
    significantly blocks homeownership, and this issue disproportionately
    impacts first-time homebuyers. Many of my first-time homebuyers have
    effectively paused their home search due to affordability issues.
    First-time buyers now represent just 21 percent of all purchases, down
    from a historical norm of around 40 percent. The typical first-time
    buyer today is 40 years old, waiting more than a decade longer than
    their parents did to buy a home. A 10-year delay in buying means losing
    more than $150,000 in potential equity growth.
        For veterans, this hits especially hard. The VA loan program's
    greatest strength, enabling veterans to purchase homes with no down
    payment, matters most when there are affordable homes to buy. When
    inventory is scarce and prices are elevated, even the best financing
    can only do so much.
        Solving this requires action on multiple fronts. In the short term,
    we need to unlock existing inventory. One of the biggest barriers is
    outdated Federal tax policy. The capital gains exclusion for home sales
    has not been updated in 27 years, and homeowners who have seen
    significant appreciation are effectively penalized for selling, which
    keeps homes off the market. NAR supports updating this exclusion
    through legislation like the More Homes on the Market Act (H.R. 1340)
    as one meaningful step to free up inventory. Improving VA loan
    assumability, which I will address shortly, is another tool that could
    help veteran buyers access existing inventory at mortgage rates lower
    than what is currently available.
        In the longer term, we need to build more homes, particularly the
    smaller, more affordable starter homes that first-time buyers need. In
    my market in Massachusetts, most entry-level buyers are looking in the
    $300,000 to $500,000 range. Getting more homes built at that price
    point would make a real difference for veterans and first-time buyers
    alike, and there is legislation before Congress right now that would
    help do exactly that.
        The Senate recently passed the 21st Century Road to Housing Act
    (H.R. 6644), and NAR encourages the House to consider the bill and work
    toward its timely passage. The bill confronts barriers to housing at
    all levels of government--giving communities new tools and resources to
    plan and build for growth, streamlining Federal processes that delay
    construction, modernizing Federal housing programs to meet the needs of
    today, and improving financing options for manufactured and rural
    housing. Critically for this hearing, it also takes steps to improve
    access to credit for homebuyers and ensures veterans can take full
    advantage of their VA home loan benefits.
        Veterans deserve a housing market with enough supply to make
    homeownership genuinely attainable, and this bill is an important step
    toward that goal. NAR remains deeply engaged on housing supply and
    affordability issues across Congress and will continue working with
    lawmakers to advance new ideas and solutions that make homeownership
    more attainable for all Americans, including those who have served our
    country.
        The improvements to the VA program I will outline today are
    meaningful and necessary. Still, the program can only reach its full
    potential when paired with a broader effort to expand affordable
    housing opportunities for veterans. Strengthening the benefit and
    increasing supply are complementary goals, and both are essential.

    Appraisals and Minimum Property Requirements: Where Veterans Lose Deals

        When it comes to the VA program itself, I want to spend most of my
    time on appraisals, because this is where I see the problem most
    clearly in my day-to-day work.
        The biggest competitive challenge I see for VA buyers is closing
    costs leading to appraisal risk. Many of my veteran buyers have limited
    cash on hand, and other than the VA funding fee, closing costs cannot
    be rolled into a VA loan. This means I often need to negotiate seller
    concessions to reduce their out-of-pocket expenses at closing. In hot
    real estate markets like my own, many sellers are not willing to simply
    reduce their asking price to cover those costs. They want to net what
    they were expecting. So, to get the seller their number and secure the
    concession my client needs, the offer price has to go above asking. The
    appraisal then has to come in at that higher number, which may be
    higher than market value. If it does not, the home seller has to either
    take less than they wanted or walk away. When that seller has another
    offer on the table without that complication, they have to ask
    themselves whether it is worth the risk. That is where veterans lose
    properties.
        That said, I have seen sellers accept VA offers over cash offers at
    the same price because they wanted to do right by a veteran. Those
    moments are genuinely moving, and they are a reminder of how much this
    country values the people who serve it. But I cannot count on that
    happening in every transaction.
        Another issue that can arise is that VA appraisers are required to
    flag property conditions that other loan programs would simply pass
    over. When that happens, the seller may be asked to make repairs before
    the loan can close, adding time and cost to the transaction and giving
    sellers yet another reason to favor a conventional offer. In some
    cases, the only path forward is to order a second appraisal, which
    means more time and more money out of pocket for a buyer who often does
    not have a lot of either. NAR recommends that Congress direct the VA to
    bring its Minimum Property Requirements in line with the standards used
    by Fannie Mae and Freddie Mac. Greater alignment would reduce those
    misconceptions and make VA-financed offers more competitive. It would
    also expand the pool of appraisers willing to work within the program
    and reduce friction throughout the transaction, all while maintaining
    the protections that veterans using the program deserve.
        Appraisal wait times are also a problem, and they are made worse by
    a shortage of VA appraisers, particularly in rural markets. In
    competitive markets, long delays can kill deals. Buyers lose rate
    locks, sellers get frustrated and move on, and the veteran is back to
    square one. NAR recommends that this Subcommittee examine how the
    appraisal process can be modernized to reduce wait times without
    sacrificing the quality and independence that protect both the borrower
    and the program, including 21st Century ROAD to Housing Act's call to
    widen the pool of appraisers allowed to perform appraisals for the VA.
    Ensuring that appraisers are compensated appropriately--for instance,
    indexing fees with inflation, allowing for surge fees, and expanding
    mileage reimbursement--could also grow the pool of appraisers in high-
    demand and rural areas. Any changes should be deliberate and evidence-
    based, but there is real opportunity here to do better for veterans.
    More broadly, NAR encourages Congress to ensure that VA has the
    staffing, technology, and resources necessary to administer the home
    loan program effectively and serve veterans in a timely manner.

    Loan Assumptions: A Benefit That Has Yet to Deliver on Its Promise

        VA loans are assumable, which in today's high interest rate
    environment sounds like an incredible feature. A buyer who takes on a
    seller's 2.5 or 3 percent mortgage instead of taking out a new loan at
    today's rates would save significantly on their monthly payment. I have
    had consumers ask me about this. Some of my veteran clients know their
    loan is assumable and want to know if it is a marketing advantage when
    they sell.
        My honest answer is that I cannot think of a single transaction in
    my career where an assumption has actually closed. The process takes
    too long, sometimes 90 days or more, and most buyers cannot bridge the
    gap between the existing loan balance and the purchase price without a
    substantial cash down payment. For buyers who have that kind of money,
    a conventional loan is often just as easy. The assumption benefit
    exists on paper, but in practice it rarely pencils out.
        I think there is real potential here that is going untapped, and
    NAR would welcome the Subcommittee's interest in finding ways to make
    assumptions more workable. Streamlining the process and shortening
    timelines would be a start. Part of the reason assumptions rarely get
    done is that lenders are not adequately compensated for facilitating
    them, so they have little incentive to prioritize the process. NAR
    recommends that the VA reevaluate its caps on lender compensation for
    facilitating mortgage assumptions. There are also ideas worth exploring
    around financing solutions that could help buyers close the equity gap,
    so that assumptions are not limited to the rare buyer who can cover the
    difference in cash. Congress should also address the fact that veterans
    currently lose their VA entitlement when their loan is assumed by a
    non-veteran, which can leave them without a benefit they earned through
    their service.

    Conclusion

        The VA Home Loan Guaranty program has been one of the most
    important benefits our Nation offers to those who serve for over 80
    years, and I am proud to have benefited from it personally. When it
    works well, it is a powerful path to homeownership and the kind of
    wealth-building that can last generations. I have seen that in my own
    life, and I have seen it in the lives of the veterans I have had the
    privilege of working with over nearly three decades in this business.
    This program deserves to be the best it can be, and NAR stands ready to
    work with this Subcommittee and the Department of Veterans Affairs to
    make that happen.
        Thank you for the opportunity to testify. I welcome your questions.

                        Prepared Statement of Alys Cohen

        Chairman Van Orden, Ranking Member Pappas, and Members of the
    Subcommittee, thank you for the opportunity to testify on behalf of the
    low-income clients of the National Consumer Law Center (NCLC) \1\
    regarding the VA Home Loan Guaranty Program.
    ---------------------------------------------------------------------------
        \1\ Since 1969, the nonprofit National Consumer Law Center (NCLC)
    has worked for consumer justice and economic security for low-income
    and other disadvantaged people in the U.S. through its expertise in
    policy analysis and advocacy, publications, litigation, expert witness
    services, and training.
    ---------------------------------------------------------------------------
        We support the goal of promoting affordability for Veteran
    homeowners, and we recognize the key role the VA Home Loan Program
    plays in providing housing stability for the Veterans who have earned
    their home loan benefit through service and sacrifice. Throughout the
    country, Veterans and their families are struggling to keep up with
    increasing housing costs both for owning or renting a home.
        The most important step the VA can take to promote affordability
    for Veterans is to help them avoid unnecessary and devastating home
    loss when they face financial hardships, including those hardships
    related to their service. To accomplish this, the Department of
    Veterans Affairs (VA) should ensure that systems are in place to help
    Veterans retain their homes when feasible. These ``home retention''
    programs keep kids in school, stabilize neighborhoods, prevent home
    equity loss, and allow Veterans to avoid an unforgiving rental market
    that in many parts of the country does not provide affordable
    alternatives to people who lose their homes. Research shows that
    helping borrowers facing financial hardship cure their delinquent
    payments and reduce monthly payments when necessary helps avoid
    defaulting again and saves the taxpayers tens of thousands of dollars
    in foreclosure-related claims.\2\
    ---------------------------------------------------------------------------
        \2\ See Home Retention Programs Save the GSEs and FHA Billions by
    Avoiding the High Cost of Preventable Dispositions (Housing Policy
    Council July 2025).
    ---------------------------------------------------------------------------
        There is significant work for the VA in this area because the
    mortgage relief options available for Veteran borrowers remain less
    favorable than the options available to other borrowers with federally
    backed mortgages. As a result, a higher share of VA seriously
    delinquent loans are moving to active foreclosure compared to Fannie
    Mae and Freddie Mac (GSE) and Federal Housing Administration (FHA)
    loans. As of the end of 2025, about 35 percent of seriously delinquent
    VA loans were in active foreclosure, compared to 30 percent for the
    GSEs and 25 percent for FHA.\3\
    ---------------------------------------------------------------------------
        \3\ See ICE Mortgage Monitor (Dec. 2025) at 6.
    ---------------------------------------------------------------------------
        It is a bedrock principle of Federal housing policy that borrowers
    who are facing financial hardship should have access to workout options
    to bring their loans current and avoid foreclosure where possible. Home
    retention policies provide stability for homeowners by giving them a
    path to recovery after financial hardships. These policies do not
    guarantee that all borrowers who fall behind can avoid foreclosure, but
    they help prevent avoidable losses. They also help Federal investors,
    like the VA, avoid losses from unnecessary foreclosures, which supports
    the health of the program and reduces the cost to taxpayers. According
    to a recent analysis, the average home disposition ``results in a loss
    to the guarantor of about $72,000,'' and well-designed loss mitigation
    options significantly reduce those losses.\4\
    ---------------------------------------------------------------------------
        \4\ See Home Retention Programs Save the GSEs and FHA Billions by
    Avoiding the High Cost of Preventable Dispositions (Housing Policy
    Council July 2025).
    ---------------------------------------------------------------------------
        Research on loan modification performance provides compelling
    evidence that catching up arrearages while keeping payments the same
    for borrowers who faced temporary hardship, and providing targeted
    payment relief for borrowers whose hardships were permanent, are the
    most cost-effective means for providing assistance that reduces
    redefault rates. Unsurprisingly, options that increase the monthly
    payment make loss mitigation less effective for both groups and lead to
    significantly more redefaults and foreclosures.\5\
    ---------------------------------------------------------------------------
        \5\ See Quantifying the Savings from FHA's Home Retention Programs
    (Housing Policy Council Sept. 2025).
    ---------------------------------------------------------------------------
        Following the below discussion of needed changes to VA's home
    retention program, we address the fact that VA has limited ability to
    affect the broader supply and affordability issues in the national
    housing market. VA borrowers operate within the broader national
    housing landscape and changes to the VA program would have limited
    impact. Moreover, VA's origination rules have yielded better loan
    performance than FHA's and changes should be considered with that in
    mind and with an eye toward continued fair lending compliance.

            1. The new VA mortgage relief options should prioritize
            affordability.

        The situation for delinquent VA borrowers should improve due to the
    passage of the VA Home Loan Program Reform Act (H.R. 1815), and we
    thank members of this Committee for your leadership on that
    legislation. However, the new ``Partial Claim'' program authorized in
    the legislation has not been implemented yet and VA's draft handbook
    proposals do not fulfill the promise of the legislation, especially
    with respect to affordability.
        According to the VA draft waterfall plan, after mortgage servicers
    consider repayment plans (which allow for relatively quick repayment of
    the delinquent amounts in addition to making the regular monthly
    payments), they must then move to an evaluation of permanent loan
    modification options.\6\ It is reasonable for VA to consider loan
    modifications early in the process because, in some situations,
    modifications may provide payment relief to borrowers while also
    avoiding the use of Partial Claim funds, which are limited under the
    statute.
    ---------------------------------------------------------------------------
        \6\ See Draft VA Manual M26-4 Chapter 5 Loss Mitigation at Steps 4-
    8 (posted March 4, 2026).
    ---------------------------------------------------------------------------
        Yet, in the list of permanent modification options, before a
    borrower can access a payment-stabilizing Partial Claim VA's proposal
    requires a homeowner to accept up to a 15 percent increase in their
    monthly payment as part of a 30-year loan modification, despite the
    fact that they are very likely delinquent because they have experienced
    a financial hardship.\7\ Of the roughly 90,000 VA borrowers who are
    seriously delinquent on their loan today, we estimate that over 30,000
    will face a payment increase if the program proceeds as drafted.\8\ VA
    has other options that create more affordable payments - a 40-year
    modification and the payment-stabilizing Partial Claim - but these
    options are not offered until later in the draft waterfall. As a
    consequence, the draft proposal makes less-than-effective use of the
    Partial Claim, which keeps monthly payments at the pre-hardship level
    by placing the past due amount at the end of the loan term so the
    borrower can resume their regular monthly payments.
    ---------------------------------------------------------------------------
        \7\ See id. at Step 6. Before the 30-year Modification, the
    servicer will consider the Traditional Modification, and the borrower
    will only receive it if it reduces the payment and they are otherwise
    eligible. If it increases the payment, the servicer will move to the
    30-year modification, which, unlike the Traditional Modification, is
    automatically offered as long as it doesn't increase the borrower's
    monthly payment by more than 15 percent. We proposed eliminating the
    Traditional Modification in our comments because it introduces
    complexity and is not necessary.
        \8\ Estimates based on Ginnie Mae Loan Performance Data provided by
    Recursion and ICE McDash, and analyzed by Center for Responsible
    Lending. Note that such analysis is based on calculations from
    privately available data because VA does not publish loan performance
    data as FHA does.
    ---------------------------------------------------------------------------
        We sincerely appreciate the fact that VA placed its proposed
    waterfall on the drafting table for comment by stakeholders. We are
    hopeful that VA will make changes as a result of the consistent
    feedback it received to change the order of its waterfall to prioritize
    affordability by offering solutions that increase the borrower's
    monthly payment only as a last resort. However, if the waterfall
    proceeds without change, it would add a significant financial burden on
    Veteran borrowers who have already experienced financial hardships and
    are behind on their mortgage as a result. For example, the 30,000
    seriously delinquent VA borrowers who would get a payment-increasing
    30-year modification under VA's proposed program would see their
    monthly payment rise by an average of $150 per month (9 percent), which
    is $1,800 per year.\9\ Many if not most of these borrowers who are
    trying to regain their financial footing are unlikely to find the
    higher payment affordable.
    ---------------------------------------------------------------------------
        \9\ Estimates based on Ginnie Mae Loan Performance Data provided by
    Recursion and analyzed by Center for Responsible Lending.
    ---------------------------------------------------------------------------
        The waterfall, if unchanged, also would unnecessarily raise costs
    for the taxpayer because payment-increasing modifications are much more
    likely to lead to foreclosure than payment-stabilizing or payment-
    decreasing modifications. The VA's proposed ordering of hardship
    assistance solutions, while understandably seeking to be sensitive to
    the effect of term extensions and total amounts due, is out of step
    with Fannie Mae, Freddie Mac, and FHA, which only consider payment
    increases as a last resort, if at all. To truly promote affordability,
    VA should ensure that Veteran borrowers have options that promote
    affordability first, which will save money for the VA Loan Guaranty
    Fund, Veteran borrowers, and mortgage servicers. In sum, a borrower's
    monthly payment is the most important aspect of maintaining an
    affordable mortgage, so loss mitigation should be designed to reduce or
    keep payments level when possible.
        Thus, VA should direct servicers to implement modifications instead
    of Partial Claims early in the evaluation process or ``waterfall'' only
    where the modification results in an equal or lower payment. If the 30-
    year modification does not achieve this result, VA should direct the
    servicer to try the 40-year modification. If even this modification
    does not result in a level payment, then the servicer should evaluate
    the borrower for a Partial Claim, which restores the borrower's pre--
    hardship payment by moving the arrears to the end of the loan without
    modifying its terms. Based on the research described above, a Partial
    Claim is significantly more likely to be successful than the payment-
    increase modification. Another reason to avoid modifications that
    result in a payment increase is the irreversibility of that action-once
    the loan's payment is increased through a payment-increase
    modification, a subsequent Partial Claim will only maintain that higher
    payment and cannot bring the homeowner back to their original payment.

            2. VA should provide a current alternative to foreclosure for
            those who can make payments and are waiting for the new home
            retention options.

        One change is urgently needed. We urge the VA to adopt measures to
    hold off foreclosures until the Partial Claim program becomes widely
    available. We have suggested full pay forbearance as one reasonable
    means of relief. Under a full pay forbearance plan, the servicer would
    agree to start accepting monthly payments again for Veterans who have
    financially recovered and can resume making their monthly payments. The
    servicer would then agree to hold off on foreclosure. This would work
    well for Veterans who would qualify for a Partial Claim once the
    program is released. It would prevent the past due amounts from
    growing, get the borrower back in the habit of making payments, and
    reduce the amount of Partial Claim VA would ultimately have to pay. In
    addition, servicers would no longer be required to fund advances of
    delinquent principal and interest to Ginnie Mae or tax and insurance
    payments. Both the VA Loan Guaranty Fund and mortgage servicers would
    be spared the cost of claims related to unnecessary losses.

            3. VA should make additional changes to the loss mitigation
            program.

                    a. Make standard forbearance available.

        Further, we suggest that VA follow industry standards (including
    for most other government-backed mortgage programs such as the GSEs and
    FHA) and offer borrowers the opportunity to request forbearance, which
    provides a temporary pause on payments when there is a hardship.
    Borrowers should be specifically permitted to request, during each
    default, a forbearance of monthly payments up to a maximum of 12 months
    of delinquency. VA's draft waterfall, which does not allow for
    servicers to offer forbearance before evaluating for home disposition
    options, does not take into account that hardships may take time to
    resolve.\10\ Importantly, borrowers are encouraged to call their
    servicers early, but if they do so when they lose their job, they are
    going to be directed to home disposition options, even though the
    hardship may be temporary and the person may be eligible for loss
    mitigation in a few months, avoiding a loss to the VA program as well.
    ---------------------------------------------------------------------------
        \10\ See Draft VA Manual M26-4 Chapter 5 Loss Mitigation at Step
    2(b) (posted March 4, 2026).
    ---------------------------------------------------------------------------
        Research shows that reperformance rates are much better when
    borrowers contact their servicer early and stay in constant
    communication with their servicer rather than delaying contact and
    trying to deal with it themselves financially.\11\ Without this
    addition of forbearance, VA borrowers will have substantially worse
    loss mitigation options compared to GSE and FHA borrowers.
    ---------------------------------------------------------------------------
        \11\ See Alexei Alexandrov, Laurie Goodman & Ted Tozer, Urban
    Institute, Normalizing Forbearance (July 2022).

                    b. Explicitly direct servicers to establish payment
    ---------------------------------------------------------------------------
                    plans when the Partial Claim becomes due.

        When the Partial Claim becomes due at the end of the borrower's
    loan, a balloon payment will be triggered. The VA should include in its
    handbook material addressing its expectations ``when the guaranteed
    loan matures'' and a balloon payment is required for borrowers who pay
    until maturity.\12\ We recommend that VA add an expectation that
    servicers establish a reasonable payment plan for borrowers unable to
    repay the Partial Claim balloon payment in a lump sum on loan maturity.
    It would be tragic for borrowers to lose their homes due to an
    inability to repay the Partial Claim balloon payment all at once, when
    they faithfully repaid their VA-guaranteed mortgage for decades.
    ---------------------------------------------------------------------------
        \12\ See Draft VA Manual M26-4 Chapter 22 Loss Mitigation at 22.04
    (posted March 4, 2026).

    ---------------------------------------------------------------------------
            4. Finalize the positive aspects of the current proposal.

        We appreciate that VA has taken steps to implement the Partial
    Claim program, and its use of the drafting table and its willingness to
    accept comments. VA's proposal included a number of positive
    developments that should be included in the final handbook language,
    including streamlining loss mitigation and not charging interest on the
    Partial Claim. We urge VA to also take additional steps to make their
    Partial Claim and loan modification programs more affordable for
    Veterans and effective for the VA Loan Guaranty Fund.

            5. While some changes to VA lending programs can be made, they
            should preserve VA loan performance and are unlikely to serve
            as a major cure for the affordability crisis.

        Aside from adjustments to its home retention program, the other
    steps VA could take, including those associated with origination costs,
    will only help around the edges at best or would seek to address issues
    that are not within VA's control. The problems of housing supply and
    overall market affordability are problems for all homebuyers and
    mortgage borrowers. For example, the particular issue of institutional
    investors using their significant financial advantages to purchase
    single family homes harms all families, including Veterans, who rely on
    mortgages and cannot compete with investor resources. The current
    Administration has recognized that this is a market-wide problem, and
    Veterans share the housing market with other borrowers. Addressing
    these dynamics is outside of VA's control and requires a whole-market
    set of solutions.
        With respect to VA's appraisal and Minimum Property Standards,
    these perform important functions of ensuring the soundness of the
    homes Veterans purchase and catching faulty appraisals. We participated
    in VA's public comment process in 2024 discussing how to improve the
    appraisal and minimum property standards.\13\ We have urged VA, in any
    revision to its appraisal standards, to implement controls against
    appraiser bias consistent with fair lending laws.
    ---------------------------------------------------------------------------
        \13\ See Comments to the VA Regarding Loan Guaranty: Minimum
    Property Requirements for VA-Guaranteed and Direct Loans (Feb. 2024).
    ---------------------------------------------------------------------------
        Regarding the VA loan origination process, any steps the agency
    takes to alter its underwriting should take into account that VA loans
    perform very well, and the agency should avoid changes that could
    undermine this loan performance or would unnecessarily narrow access to
    the program. In particular, it is worth noting that VA's unique
    underwriting guidelines, with a focus on the borrower's residual
    income, have led to an impressive track record of performance. Because
    the agency has enjoyed significant success with its underwriting
    process, and better loan performance than FHA,\14\ the agency should be
    cautious of changes to its underwriting process. Moreover, any
    reductions in closing costs will be limited and cannot have a
    significant impact on market-wide affordability issues.
    ---------------------------------------------------------------------------
        \14\ See Ginnie Mae, Report on VA Liquidity at 12-13 (Nov. 10,
    2022); Congressional Budget Office, The Role of the Department of
    Veterans Affairs in the Single-Family Mortgage Market (Sept. 2021);
    Laurie Goodman, Ellen Seidman & Jun Zhu, Urban Institute, VA Loans
    Outperform FHA Loans. Why? And What Can We Learn? (July 2014).

    ---------------------------------------------------------------------------
            6. VA should do a small-dollar mortgage pilot.

        One constructive step the VA should explore is a small-dollar
    mortgage loan pilot in coordination with FHA. There is not sufficient
    mortgage financing available for borrowers who are seeking to buy
    relatively less expensive homes. There is a particular dearth of
    lending for mortgages with balances under $150,000. This lack of
    lending limits the ability of people with modest incomes to buy modest-
    priced houses and instead pushes them into a challenging rental market.
        Some have blamed the Federal Truth in Lending Act (TILA) rules that
    were developed in the aftermath of the financial crisis, and that test
    for high-cost mortgages and limit how loan originators are paid, as
    causes for the lack of small dollar mortgage lending. As indicated in
    our issue brief, Myths and Facts About Ways to Increase Small-Dollar
    Mortgage Lending,\15\ that is simply not the case. Because the
    thresholds for rules adjust depending on the size of the loan, they are
    sufficiently flexible to accommodate small mortgages and the CFPB
    already has the ability to do an evidence-based adjustment as needed.
    ---------------------------------------------------------------------------
        \15\ See Myths and Facts About Ways to Increase Small Dollar
    Mortgage Lending, National Consumer Law Center (Aug. 2024).
    ---------------------------------------------------------------------------
        However, we do recognize that economic forces are limiting the
    availability of small dollar credit, and this directly impacts
    affordability. In order to better understand the state of this market
    and explore solutions, VA, along with FHA, should engage in a pilot
    program to better understand how to improve the situation. This pilot
    could include exploring different approaches to compensating loan
    originators, including salaries and minimum payments (even where a loan
    may be small enough to otherwise yield a smaller payment).

            7. Conclusion

        We appreciate VA's efforts to date to stand up the Partial Claim
    program, and urge VA leadership to focus squarely on the task before
    them - rolling out an affordable Partial Claim and loss mitigation
    waterfall. The agency should take steps to improve home retention
    programs in a manner that protects the VA Loan Guaranty Fund,
    eliminates unnecessary burdens on loan servicers, and ultimately
    stabilizes homeownership for Veterans who earned the home loan benefit
    through service and sacrifice.
        Thank you for the opportunity to testify. We look forward to
    working with you and the VA to shape systems that will improve
    affordability for Veteran borrowers.

                           Statements for the Record

                                  ----------

                       Prepared Statement of Auction.com

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         Prepared Statement of National Association of Mortgage Brokers

        NAMB and the mortgage professionals we represent are proud to serve
    America's veterans, and we fully support the Committee's commitment to
    expanding benefits for disabled veterans and Gold Star families. We
    submit this statement to offer a constructive path forward that
    achieves the goals of H.R. 6047 without imposing new financial burdens
    on the very veterans this legislation seeks to honor.
        As currently drafted, H.R. 6047 funds expanded benefits through VA
    loan funding fees--a mechanism that would affect an estimated 1.88
    million disabled veterans with ratings below 70 percent, representing a
    potential financial impact of approximately $24.3 billion. NAMB urges
    the Committee to consider an alternative approach that delivers equal
    or greater benefit at no new Federal cost.
        Specifically, NAMB recommends amending H.R. 6047 to allow eligible
    surviving spouses to continue receiving the deceased veteran's 100
    percent service-connected disability compensation rate in lieu of the
    reduced Dependency and Indemnity Compensation (DIC) structure. Because
    this compensation has already been authorized and appropriated by
    Congress prior to the veteran's death, this solution would meaningfully
    increase support for surviving families--effectively doubling the
    proposed $10,000 annual increase--while preserving VA Home Loan
    benefits and incurring no net increase in Federal expenditure. NAMB
    welcomes the opportunity to work with the Committee to refine this
    approach and stands ready to provide additional data in support of this
    recommendation.

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