[House Report 118-596]
[From the U.S. Government Publishing Office]


118th Congress }                                          { Report 
                        HOUSE OF REPRESENTATIVES
  2d Session   }                                          { 118-596

======================================================================
 
              CLEAR COMMUNICATION FOR VETERANS CLAIMS ACT

                                _______
                                

 July 18, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Bost, from the Committee on Veterans' Affairs, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 7643]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Veterans' Affairs, to whom was referred 
the bill (H.R. 7643) to amend title 38, United States Code, to 
authorize the use of Department of Veterans Affairs work-study 
allowance to carry out casework, policy making, and oversight 
related to the activities of the Department at certain 
congressional offices, having considered the same, reports 
favorably thereon with an amendment and recommends that the 
bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     3
Hearings.........................................................     3
Subcommittee Consideration.......................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     5
Committee Oversight Findings.....................................     5
Statement of General Performance Goals and Objectives............     5
Earmarks and Tax and Tariff Benefits.............................     5
Committee Cost Estimate..........................................     5
Budget Authority and Congressional Budget Office Estimate........     5
Federal Mandates Statement.......................................     7
Advisory Committee Statement.....................................     7
Applicability to Legislative Branch..............................     7
Statement on Duplication of Federal Programs.....................     7
Section-by-Section Analysis of the Legislation...................     7
Changes in Existing Law Made by the Bill, as Reported............     8
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Clear Communication for Veterans 
Claims Act''.

SEC. 2. INDEPENDENT ASSESSMENT OF NOTICES THAT THE SECRETARY OF 
                    VETERANS AFFAIRS SENDS TO CLAIMANTS.

  (a) Agreement.--Not later than 30 days after the date of the 
enactment of this Act, the Secretary of Veterans Affairs shall seek to 
enter into an agreement with an FFRDC for an assessment of notices that 
the Secretary sends to claimants.
  (b) Assessment.--An FFRDC that enters to an agreement und er 
subsection (a) shall submit to the Secretary a written assessment of 
such notices. The assessment shall include the following:
          (1) The determination of the FFRDC, made in consultation with 
        covered entities, whether each such notice may be feasibly 
        altered to reduce paper consumption by, and costs to, the 
        Federal Government.
          (2) The recommendations of the FFRDC regarding how the 
        Secretary may make such notices clearer to claimants, better 
        organized, and more concise.
  (c) Report; Implementation.--Not later than 90 days after the 
Secretary receives the assessment under subsection (b), the Secretary 
shall--
          (1) submit to the Committees on Veterans' Affairs of the 
        Senate and House of Representatives a copy of such assessment; 
        and
          (2) implement the recommendations in the assessment that are 
        in compliance with the laws administered by the Secretary.
  (d) Deadline for Implementation.--The Secretary shall complete the 
implementation of such recommendations pursuant to subsection (c)(2) by 
not later than one year after the date on which the Secretary commences 
such implementation.
  (e) Definitions.--In this section:
          (1) The term ``FFRDC'' means a federally funded research and 
        development center.
          (2) The term ``covered entities'' includes--
                  (A) the Secretary of Veterans Affairs;
                  (B) an expert in laws administered by the Secretary 
                of Veterans Affairs;
                  (C) a veterans service organization recognized under 
                section 5902 of title 38, United States Code; and
                  (D) an entity that advocates for veterans.
          (3) The terms ``claimant'' and ``notice'' have the meanings 
        given such terms in section 5100 of title 38, United States 
        Code.

SEC. 3. MODIFICATION OF CERTAIN HOUSING LOAN FEES.

  The loan fee table in section 3729(b)(2) of title 38, United States 
Code, is amended by striking ``November 15, 2031'' each place it 
appears and inserting ``November 29, 2031''.

                          Purpose and Summary

    H.R. 7643, the ``Veterans Congressional Work Study Act of 
2024,'' was introduced by Rep. Mark Takano of California on 
March 12, 2024. The bill, as amended, would expand the 
Department of Veterans Affairs (VA) work-study program to 
include the House and Senate Committee offices, the 
Congressional Research Center, the Government Accountability 
Office, and the Congressional Budget Office. This legislation 
also would expand work study duties to allow working on policy.
    The bill would direct VA to report annually on the number 
of work study participants and the agencies and committees 
where the work study is being conducted.
    Finally, the bill would also provide an offset for the cost 
of these program changes by extending current rates for VA home 
loan funding fees.

                  Background and Need for Legislation


Section 1: Short Title

    This Act may be cited as the ``Veterans Congressional Work 
Study Act of 2024.''

Section 2: Authorized Activities in Certain Congressional Offices Using 
        Department of Veterans Affairs Work-Study Allowance

    The VA work-study program provides eligible students 
enrolled in a program of rehabilitation, education, or training 
with employment opportunities to gain relevant experience for 
performing VA-related activities. By participating in this 
program, veterans have an opportunity to earn money they may 
use to help pay for their education. Veterans who participate 
must also be able to finish the work-study while they still 
qualify for education benefits under an approved VA benefits 
education program.
    After passage of P.L. 116-315, work-study opportunities 
included a VA regional office, a VA health care facility such 
as a medical or outpatient center, a VA data processing center, 
a VA central office location, a VA cemetery, the Board of 
Veterans' Appeals, and the offices of individual Members of 
Congress. With such a diverse range of facilities, the program 
provides a great opportunity for individuals to find a job that 
aligns with their skills and interests. Whether veterans have 
experience in healthcare, data processing, or administrative 
work, this program offers a chance to work for the VA and make 
a positive impact on the lives of veterans.
    This legislation would expand work-study to allow veterans 
to participate in this program at Committee offices, and other 
portions of the Legislative Branch, and would enhance work-
study activities to include working on policy as part of their 
duties. The Committee believes that the expansion of work-study 
opportunities will provide more veterans with the ability to 
serve their fellow veterans and earn extra money and experience 
that will prepare them for future careers.

Section 3: Modification of Certain Housing Loan Fees

    Currently, veterans who take advantage of the VA home Loan 
Program pay a small fee that is included in their monthly 
mortgage payment. This section would cover the costs of the 
other section of this bill by extending the current rates for 
VA home loan funding fees from November 15, 2031, to November 
29, 2031. Extending the funding fee increases a veteran's 
monthly costs by about $5 on top of the monthly mortgage. 
Disabled veterans do not pay the funding fee and would not be 
affected by this extension of the home loan fees. The Committee 
believes this short-term extension of current funding fee rates 
is a reasonable way to cover the costs associated with the 
other sections of this bill.

                                Hearings

    On March 20, 2023, the Subcommittee on Economic Opportunity 
held a legislative hearing on H.R. 7643 and other bills that 
were pending before the subcommittee.
    The following witnesses testified:
          Ms. Melissa Cohen, Executive Director of Outreach, 
        Transition, and Economic Development, U.S. Department 
        of Veterans Affairs; Mr. Nathan Sanfilippo, Executive 
        Director of Multichannel Technology at Veterans 
        Experience Office, U.S. Department of Veterans Affairs; 
        Mr. Thomas Alphonso, Assistant Director of Education 
        Services, U.S. Department of Veterans Affairs; Mr. 
        James Rodriguez, Assistant Secretary for Veterans' 
        Employment and Training Service, U.S. Department of 
        Labor; Ms. Kristina Keenan, Deputy Director, National 
        Legislative Service, Veterans of Foreign Wars of the 
        United States; Mr. Marquis Barefield, Assistant 
        National Legislative Director, Disabled American 
        Veterans; Ms. Nadine Bullock-Pottinga, Chief 
        Development Officer, Hire Heroes USA; Mr. Gregory John, 
        Founder and President, Infinity Flight Group, and Mr. 
        Matthew Schwartzman, Director, Legislation and Military 
        Policy, Reserve Organization of America.
    The following organizations and members submitted 
statements for the record:
          Representative Ken Calvert of California, Disabled 
        American Veterans, The American Legion, Veterans 
        Education Success, United Services Automobile 
        Association, RecruitMilitary, Orion Talent, Military 
        Talent Pipeline, Semper Forward, and ZeroMils.

                       Subcommittee Consideration

    On April 17, 2024, the Subcommittee on Economic Opportunity 
held a markup on the H.R. 7643.
          An amendment in the nature of a substitute to H.R. 
        7643 offered by Subcommittee Chairman Van Orden was 
        adopted by voice vote and the bill was ordered 
        favorably forwarded to the full Committee on Veterans 
        Affairs. The amendment in the nature of a substitute 
        added in a requirement for annual reporting 
        requirements for the Secretary to report the number of 
        work-study participants in each agency and committee if 
        the bill was enacted.
    A motion by Rep. Levin of California to favorably forward 
H.R. 7643, as amended, to the full committee was adopted by 
voice vote.

                        Committee Consideration

    On May 1, 2024, the full Committee met in open markup 
session, a quorum being present, and ordered H.R. 7643, as 
amended, to be reported favorably to the House of 
Representatives by voice vote. During consideration of the 
bill, the following amendments were considered:
          An amendment in the nature of a substitute offered by 
        Representative Levin that included the text of H.R. 
        7643, as adopted by the Subcommittee on Economic 
        Opportunity. The amendment would also extend current 
        rates for VA home loan funding fees to November 29, 
        2031, to pay for programs in the bill.
    The amendment in the nature of a substitute, as amended, 
was approved by voice vote.
    A motion by Ranking Member Takano to report H.R. 7643, as 
amended, favorably to the House of Representatives was agreed 
to by voice vote.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, no recorded votes were taken on 
amendments or in connection with ordering H.R. 7643 as amended, 
reported to the House.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives of H.R. 7643, as amended, are to provide 
increased employment opportunities for veterans while they are 
pursuing an education and after graduation.

                  Earmarks and Tax and Tariff Benefits

    H.R. 7643, as amended, does not contain any Congressional 
earmarks, limited tax benefits, or limited tariff benefits as 
defined in clause 9 of rule XXI of the Rules of the House of 
Representatives.

                        Committee Cost Estimate

    The Committee adopts as its own the Congressional Budget 
Office cost estimate on this measure.

     Budget Authority and Congressional Budget Office Cost Estimate




    H.R. 7643 would make changes to education benefit and home 
loan programs administered by the Department of Veterans 
Affairs (VA). The costs of both programs are paid from 
mandatory appropriations. CBO estimates that enacting the bill 
would decrease net direct spending by $17 million over the 
2024-2034 period.
    Congressional Work-Study. Under current law, VA pays work-
study allowances to students using VA education benefits who 
are hired by a VA facility, state veterans agency, educational 
institution, or office of a Member of Congress to perform 
specified activities related to veteran benefits or services. 
That allowance is paid at the higher of the state or federal 
minimum wage for up to 25 hours per week during enrollment. 
H.R. 7643 would add related work at Congressional committees or 
agencies, including policy-making and departmental oversight, 
to the authorized activities for which VA may pay work-study 
allowances. CBO expects that roughly 25 students located in or 
around Washington, D.C. would receive work-study allowances for 
activities authorized by the bill. Using information about the 
D.C. minimum wage, CBO estimates that allowances paid to those 
students would increase direct spending by $5 million over the 
2024-2034 period.
    The bill also would require VA to report annually to the 
Congress on the number of students participating in work-study 
activities at Congressional offices, committees, and agencies. 
Based on the costs of preparing similar reports, CBO estimates 
that satisfying that requirement would cost less than $500,000 
over the 2024 2034 period; such spending would be subject to 
the availability of appropriated funds.
    Homes Loan Fees. H.R. 7643 would increase the fees that VA 
charges borrowers for its loan guarantees. VA provides loan 
guarantees to lenders that allow eligible borrowers to obtain 
better loan terms--such as lower interest rates or smaller down 
payments--to purchase, construct, improve, or refinance a home. 
VA typically pays lenders up to 25 percent of the outstanding 
mortgage balance if a borrower's home is foreclosed upon. Those 
payments, net of fees paid by borrowers and recoveries by 
lenders, constitute the subsidy cost for the loan 
guarantees.\1\
---------------------------------------------------------------------------
    \1\Under the Federal Credit Reform Act of 1990, the subsidy cost of 
a loan guarantee is the net present value of estimated payments by the 
government to cover defaults and delinquencies, interest subsidies, or 
other expenses offset by any payments to the government, including 
origination or other fees, penalties, and recoveries on defaulted 
loans. Such subsidy costs are calculated by discounting those expected 
cash flows using the rate on Treasury securities of comparable 
maturity. The resulting estimated subsidy costs are recorded in the 
budget when the loans are disbursed or modified. A positive subsidy 
indicates that the loan results in net outlays from the Treasury; a 
negative subsidy indicates that the loan results in net receipts to the 
Treasury.
---------------------------------------------------------------------------
    Under current law, the rates for most of the fees that 
borrowers pay to VA for loans guaranteed after November 15, 
2031, will drop from a weighted average of about 2.3 percent to 
about 1.2 percent of the loan amount. The bill would extend the 
higher rates through November 29, 2031, thereby reducing the 
subsidy cost of loans guaranteed during that period. Using its 
forecast of loan volume based on data provided by VA, CBO 
estimates that extending the higher rates would decrease direct 
spending by $22 million over the 2024-2034 period.
    The costs of the legislation, detailed in Table 1, fall 
within budget function 700 (veterans benefits and services).

                                                   TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 7643
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                By fiscal year, millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2024    2025    2026    2027    2028    2029    2030    2031    2032    2033    2034   2024-2029  2024-2034
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Increases or Decreases (-) in Direct Spending
 
Work-Study................................       *       *       1       *       1       *       1       *       1       *       1         2          5
Home Loan Fees............................       0       0       0       0       0       0       0       0     -22       0       0         0        -22
Total Changes in Direct Spending..........       *       *       1       *       1       *       1       *     -21       *       1         2        -17
--------------------------------------------------------------------------------------------------------------------------------------------------------
* = between zero and $500,000; budget authority equals outlays for all sections.
In addition to the amounts shown here, implementing the bill would increase spending subject to appropriation by less than $500,000 over the 2024-2034
  period.

    The CBO staff contact for this estimate is Paul B.A. 
Holland. The estimate was reviewed by Christina Hawley Anthony, 
Deputy Director of Budget Analysis.
                                         Phillip L. Swagel,
                             Director, Congressional Budget Office.

                       Federal Mandates Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4) is inapplicable to H.R. 7643 as 
amended.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act would be created by H.R. 
7643, as amended.

                  Applicability to Legislative Branch

    The Committee finds that H.R. 7643, as amended, does not 
relate to the terms and conditions of employment or access to 
public services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

              Statement on Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that no provision 
of H.R. 7643, as amended, would establish or reauthorize a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 would establish the short title of the bill as 
``Veterans Congressional Work Study Act of 2024.''

Section 2. Authorized activities in certain congressional offices using 
        Department of Veterans Affairs work-study allowance

    Section 2 would amend 38 U.S.C. Sec. 3485(a)(5) to expand 
the VA Work-Study Program to include Committee offices in the 
House and Senate as well as several agencies, including the 
Congressional Budget Office, Government Accountability Office, 
and the Congressional Research Center. Additionally, this 
section would require an annual report on how many participants 
received work-study allowance at each of the agencies and in 
Congressional Committees.

Section 3. Modification of certain housing loan fees

    This section would provide funding for these programs 
included in the bill by extending current rates for VA home 
loan funding fees as established in 38 U.S.C. Sec. 3729 from 
November 15, 2031, to November 29, 2031.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                      TITLE 38, UNITED STATES CODE



           *       *       *       *       *       *       *
PART III--READJUSTMENT AND RELATED BENEFITS

           *       *       *       *       *       *       *


CHAPTER 37--HOUSING AND SMALL BUSINESS LOANS

           *       *       *       *       *       *       *


SUBCHAPTER III--ADMINISTRATIVE PROVISIONS

           *       *       *       *       *       *       *


Sec. 3729. Loan fee

  (a) Requirement of Fee.--(1) Except as provided in subsection 
(c), a fee shall be collected from each person obtaining a 
housing loan guaranteed, insured, or made under this chapter, 
and each person assuming a loan to which section 3714 of this 
title applies. No such loan may be guaranteed, insured, made, 
or assumed until the fee payable under this section has been 
remitted to the Secretary.
  (2) The fee may be included in the loan and paid from the 
proceeds thereof.
  (b) Determination of Fee.--(1) The amount of the fee shall be 
determined from the loan fee table in paragraph (2). The fee is 
expressed as a percentage of the total amount of the loan 
guaranteed, insured, or made, or, in the case of a loan 
assumption, the unpaid principal balance of the loan on the 
date of the transfer of the property.
  (2) The loan fee table referred to in paragraph (1) is as 
follows:


 
----------------------------------------------------------------------------------------------------------------
             Type of loan                Active duty  veteran          Reservist              Other obligor
----------------------------------------------------------------------------------------------------------------
(A)(i) Initial loan described in       2.15                     2.40                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 October 1, 2004, and before January
 1, 2020).
(A)(ii) Initial loan described in      2.30                     2.30                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 January 1, 2020, and before April 7,
 2023).
(A)(iii) Initial loan described in     2.15                     2.15                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 April 7, 2023, and before [November
 15, 2031] November 29, 2031 ).
(A)(iv) Initial loan described in      1.40                     1.40                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 [November 15, 2031] November 29,
 2031 ).
(B)(i) Subsequent loan described in    3.30                     3.30                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after October 1, 2004, and before
 January 1, 2020).
(B)(ii) Subsequent loan described in   3.60                     3.60                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after January 1, 2020, and before
 April 7, 2023).
(B)(iii) Subsequent loan described in  3.30                     3.30                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after April 7, 2023, and before
 [November 15, 2031] November 29,
 2031 ).
(B)(iv) Subsequent loan described in   1.25                     1.25                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after [November 15, 2031] November
 29, 2031 ).
(C)(i) Loan described in section       1.50                     1.75                     NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed before
 January 1, 2020).
(C)(ii) Loan described in section      1.65                     1.65                     NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed on or
 after January 1, 2020, and before
 April 7, 2023).
(C)(iii) Loan described in section     1.50                     1.50                     NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed on or
 after April 7, 2023, and before
 [November 15, 2031] November 29,
 2031 ).
(C)(iv) Loan described in section      0.75                     0.75                     NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed on or
 after [November 15, 2031] November
 29, 2031 ).
(D)(i) Loan described in section       1.25                     1.50                     NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed before
 January 1, 2020).
(D)(ii) Loan described in section      1.40                     1.40                     NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed on or
 after January 1, 2020, and before
 April 7, 2023).
(D)(iii) Loan described in section     1.25                     1.25                     NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed on or
 after April 7, 2023, and before
 [November 15, 2031] November 29,
 2031 ).
(D)(iv) Loan described in section      0.50                     0.50                     NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed on or
 after [November 15, 2031] November
 29, 2031 ).
(E) Interest rate reduction            0.50                     0.50                     NA
 refinancing loan.
(F) Direct loan under section 3711...  1.00                     1.00                     NA
(G) Manufactured home loan under       1.00                     1.00                     NA
 section 3712 (other than an interest
 rate reduction refinancing loan).
(H) Loan to Native American veteran    1.25                     1.25                     NA
 under section 3762 (other than an
 interest rate reduction refinancing
 loan).
(I) Loan assumption under section      0.50                     0.50                     0.50
 3714.
(J) Loan under section 3733(a).......  2.25                     2.25                     2.25.
----------------------------------------------------------------------------------------------------------------

  (3) Any reference to a section in the ``Type of loan'' column 
in the loan fee table in paragraph (2) refers to a section of 
this title.
  (4) For the purposes of paragraph (2):
          (A) The term ``active duty veteran'' means any 
        veteran eligible for the benefits of this chapter other 
        than a Reservist.
          (B) The term ``Reservist'' means a veteran described 
        in section 3701(b)(5)(A) of this title who is eligible 
        under section 3702(a)(2)(E) of this title.
          (C) The term ``other obligor'' means a person who is 
        not a veteran, as defined in section 101 of this title 
        or other provision of this chapter.
          (D)(i) The term ``initial loan'' means a loan to a 
        veteran guaranteed under section 3710 or made under 
        section 3711 of this title if the veteran has never 
        obtained a loan guaranteed under section 3710 or made 
        under section 3711 of this title.
          (ii) If a veteran has obtained a loan guaranteed 
        under section 3710 or made under section 3711 of this 
        title and the dwelling securing such loan was 
        substantially damaged or destroyed by a major disaster 
        declared by the President under section 401 of the 
        Robert T. Stafford Disaster Relief and Emergency 
        Assistance Act (42 U.S.C. 5170), the Secretary shall 
        treat as an initial loan, as defined in clause (i), the 
        next loan the Secretary guarantees or makes to such 
        veteran under section 3710 or 3711, respectively, if--
                  (I) such loan is guaranteed or made before 
                the date that is three years after the date on 
                which the dwelling was substantially damaged or 
                destroyed; and
                  (II) such loan is only for repairs or 
                construction of the dwelling, as determined by 
                the Secretary.
          (E) The term ``subsequent loan'' means a loan to a 
        veteran, other than an interest rate reduction 
        refinancing loan, guaranteed under section 3710 or made 
        under section 3711 of this title that is not an initial 
        loan.
          (F) The term ``interest rate reduction refinancing 
        loan'' means a loan described in section 3710(a)(8), 
        3710(a)(9)(B)(i), 3710(a)(11), 3712(a)(1)(F), or 
        3762(h) of this title.
          (G) The term ``0-down'' means a downpayment, if any, 
        of less than 5 percent of the total purchase price or 
        construction cost of the dwelling.
          (H) The term ``5-down'' means a downpayment of at 
        least 5 percent or more, but less than 10 percent, of 
        the total purchase price or construction cost of the 
        dwelling.
          (I) The term ``10-down'' means a downpayment of 10 
        percent or more of the total purchase price or 
        construction cost of the dwelling.
  (c) Waiver of Fee.--(1) A fee may not be collected under this 
section from a veteran who is receiving compensation (or who, 
but for the receipt of retirement pay or active service pay, 
would be entitled to receive compensation), from a surviving 
spouse of any veteran (including a person who died in the 
active military, naval, air, or space service) who died from a 
service-connected disability, or from a member of the Armed 
Forces who is serving on active duty and who provides, on or 
before the date of loan closing, evidence of having been 
awarded the Purple Heart.
  (2)(A) A veteran described in subparagraph (B) shall be 
treated as receiving compensation for purposes of this 
subsection as of the date of the rating described in such 
subparagraph without regard to whether an effective date of the 
award of compensation is established as of that date.
  (B) A veteran described in this subparagraph is a veteran who 
is rated eligible to receive compensation--
          (i) as the result of a pre-discharge disability 
        examination and rating; or
          (ii) based on a pre-discharge review of existing 
        medical evidence (including service medical and 
        treatment records) that results in the issuance of a 
        memorandum rating.

           *       *       *       *       *       *       *


                                  [all]