[House Report 119-104]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 119-104
======================================================================
VA HOME LOAN PROGRAM REFORM ACT
_______
May 19, 2025.--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
together with
MINORITY VIEWS
[To accompany H.R. 1815]
[Including cost estimate of the Congressional Budget Office]
The Committee on Veterans' Affairs, to whom was referred
the bill (H.R. 1815) to amend title 38, United States Code, to
authorize the Secretary of Veterans Affairs to take certain
actions in the case of a default on a home loan guaranteed by
the Secretary, and for other purposes, having considered the
same, reports favorably thereon with an amendment and
recommends that the bill as amended do pass.
CONTENTS
Page
Bill............................................................. 2
Purpose and Summary.............................................. 4
Background and Need for Legislation.............................. 5
Hearings......................................................... 8
Subcommittee Consideration....................................... 8
Committee Consideration.......................................... 9
Committee Votes.................................................. 9
Committee Oversight Findings..................................... 11
Statement of General Performance Goals and Objectives............ 11
Earmarks and Tax and Tariff Benefits............................. 11
Committee Cost Estimate.......................................... 11
Budget Authority and Congressional Budget Office Estimate........ 11
Federal Mandates Statement....................................... 15
Advisory Committee Statement..................................... 15
Applicability to Legislative Branch.............................. 15
Statement on Duplication of Federal Programs..................... 16
Section-by-Section Analysis of the Legislation................... 16
Changes in Existing Law Made by the Bill, as Reported............ 17
Minority Views................................................... 27
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 ``VA Home Loan Program Reform Act''.
SEC. 2. AUTHORITY OF THE SECRETARY OF VETERANS AFFAIRS TO TAKE CERTAIN
ACTIONS IN THE CASE OF A DEFAULT ON A HOME LOAN
GUARANTEED BY THE SECRETARY.
(a) In General.--Section 3732 of title 38, United States Code, is
amended--
(1) in subsection (a)--
(A) in paragraph (1), by striking ``obligation'' each
place it appears and inserting ``loan'';
(B) in paragraph (2)--
(i) by amending subparagraph (A) to read as
follows:
``(A) The Secretary may, under terms and conditions determined by the
Secretary--
``(i) pay the holder of a loan guaranteed under this chapter
an amount necessary to avoid the foreclosure of such loan;
``(ii) require the holder of the loan and the veteran
obligated on the loan to execute all documents necessary to
ensure the Secretary obtains a secured interest in the property
covered by the loan; and
``(iii) require the holder of the loan to take any actions
necessary to carry out this paragraph, including preparing,
executing, transmitting, receiving, and recording documents,
and requiring the holder of the loan to place the loan in
forbearance.'';
(ii) in subparagraph (B), by striking
``obligation'' each place it appears and
inserting ``housing loan''; and
(iii) by adding at the end the following new
subparagraphs:
``(C)(i) Any decision by the Secretary under this paragraph is final
and is not subject to judicial review.
``(ii) For purposes of section 511 of this title, any decision under
this paragraph shall not be treated as a decision under a law that
affects the provision of benefits.
``(D)(i) The Secretary may establish standards for processing
payments under this paragraph based on a certification by a holder of a
loan guaranteed under this chapter that the holder has complied with
all applicable requirements established by the Secretary.
``(ii) The Secretary shall carry out, on a random-sampling basis,
post-payment audits to ensure compliance with all requirements
described in clause (i).''; and
(C) in paragraph (5), by striking ``obligation'' and
inserting ``loan'';
(2) in subsection (c)--
(A) in paragraph (1), in the matter preceding
subparagraph (A), by striking ``subsection--'' and
inserting ``subsection:''; and
(B) in paragraph (10)(B)(i), by striking
``forebearance'' each place it appears and inserting
``forbearance''; and
(3) by adding at the end the following new subsection:
``(d) The Secretary shall prescribe loss mitigation procedures,
including a mandatory sequence in which the holder of a loan guaranteed
under this chapter shall offer loss mitigation options (including an
option to enter into a partial claim agreement under the VA Home Loan
Program Reform Act) to a veteran, to help prevent the foreclosure of
such loan. The Secretary may not purchase an entire such loan until the
veteran has completed such sequence.''.
(b) Relationship to Other Powers of Secretary.--Section 3720 of such
title is amended--
(1) in subsection (a), by striking ``Notwithstanding'' and
inserting ``Except as provided in subsection (h),
notwithstanding'';
(2) by redesignating subsections (f) through (h) as
subsections (e) through (g), respectively; and
(3) by adding at the end the following new subsection (h):
``(h) The Secretary may not take any action under paragraph (2), (3),
(4), or (5) of subsection (a) with respect to a loan guaranteed under
this chapter before the completion of the sequence of mitigation
options offered to the veteran to whom the loan is made under section
3732(d) of this title.''.
SEC. 3. PARTIAL CLAIM PROGRAM OF THE DEPARTMENT OF VETERANS AFFAIRS.
(a) In General.--Subchapter III of chapter 37 of title 38, United
States Code, is amended by adding at the end the following new section:
``Sec. 3737. Partial Claim Program
``(a) Establishment.--The Secretary shall carry out a program, to be
known as the `Partial Claim Program', under which the Secretary may
make a partial claim, described in subsection (b), with respect to a
loan--
``(1) guaranteed under this chapter;
``(2) regarding the primary residence of the borrower; and
``(3) that the Secretary determines is in default or at
imminent risk of default.
``(b) Partial Claim Described.--A partial claim described in this
subsection, with respect to a loan described in subsection (a), is the
purchase by the Secretary of a portion of indebtedness under the loan,
through a transaction under which the Secretary--
``(1) pays to the holder of the loan the amount of
indebtedness, subject to subsection (c), that the Secretary
determines necessary to help prevent or resolve a default; and
``(2) receives a secured interest in the property that serves
as collateral for the guaranteed loan, which is subordinate to
the first lien guaranteed loan for such property.
``(c) Administration of Partial Claim.--(1)(A) Subject to
subparagraph (B), the amount of a partial claim under this section with
respect to a loan guaranteed described in subsection (a) may not exceed
25 percent of the unpaid principal balance of the loan on the date on
which the partial claim is made.
``(B) In the case of an individual who failed to make a payment on a
loan guaranteed under this chapter during the period beginning on March
1, 2020 and ending on May 1, 2025, the amount of a partial claim under
this section may not exceed 30 percent of the unpaid principal balance
of the guaranteed loan as of the date that the initial partial claim is
made.
``(2)(A) Subject to subparagraph (B), the Secretary may make only one
partial claim per loan.
``(B) The Secretary may make an additional partial claim on a loan
guaranteed under this chapter in the case of an individual who failed
to make a payment on such loan during--
``(i) a major disaster declared by the President under
section 401 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5170); or
``(ii) the period of 120 days following such a major
disaster.
``(3) An amount paid to the holder of a loan as a partial claim--
``(A) shall not count against the amount of a loan that may
otherwise be guaranteed under this chapter; and
``(B) may not be applied to the portion of the loan that is
guaranteed under this chapter.
``(4) A holder of a loan guaranteed under such chapter for which the
Secretary makes a partial claim under this section shall apply the
amount paid by the Secretary for the partial claim first to arrearages,
if any, on the guaranteed loan. Such arrearages may include any
additional costs (such as taxes, insurance premiums, or homeowner's
dues) the Secretary determines necessary to prevent or resolve a
default.
``(5) The Secretary may enter into a contract with an appropriate
entity for the service of a partial claim made by the Secretary under
this section. Any such contract shall provide that such entity shall
provide quarterly statements to the holder of the loan for which the
Secretary makes the partial claim.
``(d) Requirements of Loan Holder.--(1) The Secretary may require the
holder of a loan for which the Secretary makes a partial claim under
this section to take any actions necessary to establish the partial
claim, including preparing, executing, transmitting, receiving, and
recording loan documents.
``(2) The Secretary shall compensate the holder of such a loan
appropriately, as determined by the Secretary, for the services
required of such holder under this subsection.
``(3) The Secretary may exercise the authority of the Secretary under
this subsection without regard to any other provision of law not
enacted expressly in limitation of this section that would otherwise
govern the expenditure of public funds.
``(e) Default and Foreclosure.--(1)(A) Notwithstanding section
3703(e) of this title, an individual who defaults on a loan for which
the Secretary makes a partial claim made under this section shall be
liable to the Secretary for any loss suffered by the Secretary
resulting from such default. Such a loss may be recovered in the same
manner as any other debt due the United States.
``(B) In the event of default by an individual on a loan for which
the Secretary makes a partial claim made under this section, the
Secretary may reduce the aggregate amount of guaranty or insurance
housing loan entitlement available to the individual under this
chapter.
``(2) Notwithstanding section 2410(c) of title 28, an action to
foreclose a lien held by the United States arising under a partial
claim made under this section shall follow foreclosure procedures in
accordance with State or local law where the property involved is
located.
``(f) Decisions by the Secretary.--(1) Any partial claim made under
this section shall be made in the sole discretion of the Secretary and
on terms and conditions acceptable to the Secretary that are consistent
with this section.
``(2) Any decision by the Secretary under this section is final and
conclusive and is not subject to judicial review.
``(3) For purposes of section 511 of this title, any decision under
this section shall not be treated as a decision under a law that
affects the provision of benefits.
``(g) Compliance.--(1) The Secretary may establish standards for
processing payments under this section based on a certification by a
holder of a loan guaranteed under such chapter that the holder has
complied with all applicable requirements established by the Secretary.
``(2) The Secretary shall carry out, on a random-sampling basis,
post-payment audits to ensure compliance with all requirements under
paragraph (1).
``(h) Guidance With Respect to Certain Loans.--(1) With respect to a
loan described in paragraph (2), the Secretary may--
``(A) before prescribing regulations, issue administrative
guidance regarding the making of a partial claim relating to
such loan; and
``(B) establish, through such guidance, additional
requirements applicable to such a partial claim.
``(2) A loan described in this paragraph is a loan that the Secretary
determines was in default on the date of the enactment of this section.
``(i) Rule of Construction.--Nothing in this section shall be
construed to limit the authority of the Secretary under subsections (a)
and (d) of section 3732 of this title.
``(j) Termination.--The Secretary may not make a partial claim under
this section after the date that is five years after the date of the
enactment of this section.''.
(b) Clerical Amendment.--The table of sections at the beginning of
such chapter is amended by inserting after the item relating to section
3736 the following new item:
``3737. Partial Claim Program.''.
SEC. 4. STRATEGY OF THE SECRETARY OF VETERANS AFFAIRS REGARDING THE
EFFECT OF CERTAIN LITIGATION.
Not later than 90 days after the date of the enactment of this Act,
the Secretary of Veterans Affairs shall submit to the Committees on
Veterans' Affairs of the Senate and House of Representatives a report
on the strategy of the Secretary to ensure that a veteran who seeks to
purchase a home with a loan guaranteed under chapter 37 of title 38,
United States Code, is not at a disadvantage when attempting to secure
representation by a real estate agent or broker. Such strategy may
include amendments to section 36.4313 of title 38, Code of Federal
Regulations.
SEC. 5. INCREASE OF AUTHORIZATION OF APPROPRIATIONS FOR COMPREHENSIVE
SERVICE PROGRAMS FOR HOMELESS VETERANS.
Section 2016 of title 38, United States Code, is amended--
(1) in paragraph (7), by striking ``fiscal year 2015 and each
subsequent fiscal year'' and inserting ``each of fiscal years
2015 through 2024''; and
(2) by adding at the end the following new paragraphs:
``(8) $344,000,000 for each of fiscal years 2025 and 2026.
``(9) $257,700,000 for each fiscal year thereafter.''.
Purpose and Summary
H.R. 1815, the ``VA Home Loan Program Reform Act,'' was
introduced by Representative Derrick Van Orden of Wisconsin on
March 3, 2025. H.R. 1815, as amended, would require the
Secretary of the Department of Veterans Affairs (VA) to create
and establish a partial claim program within the VA Home Loan
program. This bill would ensure that when a veteran uses the
partial claim program, the amount of money applied to a
veteran's arrearage would not count against the guarantee
provided to the lender on the original loan. This bill would
also require VA to develop a strategy to ensure veterans remain
competitive in the home loan process. Additionally, this bill
would authorize funding for the Grant Per-Diem (GPD) program.
Background and Need for Legislation
Section 1: Short Title
This Act may be cited as the ``VA Home Loan Program Reform
Act.''
Section 2: Authority of the Secretary of Veterans Affairs to Take
Certain Actions in the Case of a Default on a Home Loan
Guaranteed by the Secretary
VA has assisted veterans with homeownership since 1944,
when Congress enacted the loan guaranty program to help
veterans who were returning home from World War II purchase
homes.\1\ The loan guaranty program helps veterans by insuring
mortgages made by private lenders. It is available for the
purchase or construction of homes, as well as to refinance
existing loans. The loan guaranty program has expanded over the
years, updating its regulations through published circulars.
During the COVID pandemic, through the CARES Act [P.L. 116-
136], VA implemented the COVID-VAPCP, or VA's Partial claim
Program.
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\1\VA Housing: Guaranteed Loans, Direct Loans, and Specially
Adapted Housing Grants.
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The COVID-VAPCP was a temporary program to help borrowers
who were suffering from financial hardship due to the COVID
pandemic. Under the CARES Act, a veteran who was experiencing
financial hardship related to COVID was allowed to request
forbearance on government guaranteed mortgage loans. VA was
authorized to assist a borrower that had utilized a COVID
forbearance by purchasing the veteran's debt from the loan
servicer. In exchange for VA's partial claim payment on behalf
of the borrower, the borrower agreed to repay VA, in the amount
of such partial claim payment, upon loan terms established by
the VA Secretary at the time.\2\ Once the CARES Act provisions
expired during the Biden-Harris administration, VA implemented
the VA Servicer Purchasing (VASP) program.
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The VASP program allowed any veteran who had missed at
least three mortgage payments to apply for relief. Under the
VASP program, VA would buy the loan of a veteran who was behind
on their mortgage from the private lender and give them a new
loan at a reduced interest rate of 2.5%. There were no
guardrails on the VASP program, which was a cause for concern.
A veteran did not need to show proof of income when applying
for VASP; they would be eligible as long as they had missed
three payments on their mortgage. Some at-risk veterans did
have to go through a Trial Payment Plan (TTP) to ensure they
could pay their mortgage at the new rate, but this applied to
only about 3% of veterans participating in the program. The
other 97% did not need to show financial need to participate in
the program.
This program was implemented without congressional
authority and was purported to save money according to VA and
the Office of Management and Budget (OMB) at the time. VA also
estimated that 80,000 veterans would participate in the VASP
program. As of April 2025, over 17,000 people have participated
in the program and VA had purchased $5.48 billion of loans. The
average loan under the program is $321,000. VA purchased these
loans even though the average veteran who was delinquent was
just $22,000 behind on their mortgage. Under the Trump
Administration, VA announced it was ending VASP and began a
phased rollback of the program. All veterans enrolled in the
program could be grandfathered in until May 1, 2025. After
that, no new applications would be accepted.
This section of this bill would grant the Secretary the
authority to implement a partial claim program. The Federal
Housing Administration (FHA) and the United States Department
of Agriculture (USDA) both have partial claim programs.
Creating a partial claim program within the VA Home Loan
program would put the VA Home Loan program on the same level as
other federal home loan programs and allow VA to provide needed
relief to veterans without requiring VA to become the lender of
record for billions of dollars of mortgage loans. It is
important to note the partial claim would not count against
VA's guarantee to the original lender to cover up to 25% of the
loan if there is a foreclosure.
The Committee believes it is important to provide VA with
the authority to establish a partial claim option within the VA
Home Loan program to allow veterans who get behind on their
mortgages to have options similar to other federal housing
programs like FHA and USDA. The Committee believes this would
help veterans who may fall behind on their mortgage in the
current high-interest rate environment and that this program is
more fiscally responsible than the VASP program. While VA's
loss mitigation waterfall has multiple options to assist a
veteran who is at risk of defaulting before foreclosure, adding
a partial claim option to the program would prevent more
veterans from foreclosure, and prevent VA from having to
maintain a property post foreclosure.
Section 3: Partial Claim Program of the Department of Veterans Affairs
This section would amend subsection III of Chapter 37 of
Title 38 to establish the partial claim program for five years
after enactment of the legislation. This section would
establish the program itself. The program would allow the
Secretary to cover up to 25% of the unpaid principal balance of
the original loan for a primary residence. This bill would also
provide relief for a veteran during a natural disaster; if the
President declares a major disaster a veteran or servicemember
would be eligible for an additional partial claim of 25% during
the duration of the declaration, or for 120 days after the
President declares the major disaster. Specific individuals who
were working through other loss mitigation options because of
COVID-19 up until May 1, 2025, may qualify for a partial claim
up to 30% of their unpaid principal balance to account for
extra arrears because of the foreclosure moratorium that
existed during that time period.
The Committee believes that allowing an additional 5% of
the unpaid principal balance to be covered for those veterans
experiencing financial hardships due to COVID would help them
avoid foreclosure. The allowance of multiple partial claims for
victims of a Presidentially declared major disaster may also
assist veterans in avoiding foreclosure, which generally would
cost VA more than allowing for other loss mitigation options.
Additionally, by placing a time limitation on the window to
apply for a partial claim in the event of a major disaster, the
federal government would prevent individuals who have missed
payments not because of the disaster, but by being in the area
of the disaster, from applying for a partial claim. The
Committee is supportive of VA establishing a partial claim
program as part of VA's loss mitigation process. This would
allow veterans more options to get back on their feet when
dealing with temporary financial hardship and prevent veteran
homelessness.
Section 4: Strategy of the Secretary of Veterans Affairs Regarding the
Effect of Certain Litigation
The National Association of Realtors (NAR) was sued by
buyers in several states who alleged that the way compensation
for real estate agents was set by the industry violated the
law. The NAR entered into an agreement to settle numerous class
action lawsuits alleging antitrust violations. The terms of
NAR's settlement agreement, which were established in August
2024 and approved by the court in November 2024, included
industry practice changes that impacted the settlement and
payment of buyer's agent commissions. In some transactions,
sellers may choose not to pay buyer broker compensation,
particularly if competing buyers offer to cover the cost
themselves. The settlement created a difficult situation for
veteran buyers. Under the home loan program at VA, veterans
were not permitted to pay a buyer agent to represent them. As
the implementation date approached, VA temporarily lifted its
longstanding policy that prohibited veterans from paying fees
or commissions to real estate agents or brokers on a VA home
loan.
This section would require VA to develop a long-term
strategy to help ensure that veterans remain competitive buyers
in the housing market. The Committee believes this is important
because the strategy must guarantee that a veteran using a home
loan backed by VA is not at a disadvantage when securing
representation from a real estate agent or broker. While VA has
published interim guidance, this would ensure that VA creates a
long-term strategy to maintain the competitiveness of VA home
loans for veteran homebuyers.
Section 5: Increase Authorizations of Appropriations for Comprehensive
Service Programs for Homeless Veterans
In P.L. 118-210, the Senator Elizabeth Dole 21st Century
Veterans Healthcare and Benefits Improvement Act (the Dole
Act), Section 402, authorized an increase in the funding for
the Grant Per Diem (GPD) program. The GPD rate increased during
the COVID pandemic, and this provision increased the GPD from
115% to 133%, with certain providers in the program receiving
200%. This section would ensure there was sufficient
authorization to cover the cost of the increase in the GPD
rate. The Committee believes this authorization of funding is
essential to pay for the Dole Act that was signed into law on
January 2, 2025.
Hearings
On March 11, 2025, the Subcommittee on Economic Opportunity
held a legislative hearing on H.R. 1815 and other bills that
were pending before the subcommittee.
The following witnesses testified:
Mr. John Bell, Executive Director of Loan Guaranty
Service, U.S. Department of Veterans Affairs; Mr. Nick
Pamperin, Executive Director, Veterans Readiness and
Employment, U.S. Department of Veterans Affairs; Mr.
Thomas J. Alphonso, Assistant Director, Policy and
Implementation, Veterans Benefits Administration, U.S.
Department of Veterans Affairs; Ms. Jill Albanese,
Director of Clinical Operations, U.S. Department of
Veterans Affairs; Ms. Kristina Keenan, Deputy Director,
National Legislative Service, Veterans of Foreign Wars;
Ms. Julie Howell, Associate Legislative Director for
Governmental Relations, Paralyzed Veterans of America;
Ms. Elizabeth Balce, Executive Vice President of
Servicing at Carrington Mortgage, Mortgage Bankers
Association; Mr. Tobias Peter, Co-Director of the
Housing Center, Senior Fellow, American Enterprise
Institute; and Mr. Will Hubbard, Vice President for
Veterans and Military Policy, Veterans Education
Success.
The following individuals and organizations submitted
statements for the record:
Freedom Mortgage, Student Veterans of America, the
Veterans Education Project, National Association of
Veterans Program Administrators, National Consumer Law
Center, BraunAbility, National Mobility Equipment
Dealers Association, and the National Alliance to End
Homelessness.
Subcommittee Consideration
On April 9, 2025, the Subcommittee on Economic Opportunity
held an open markup session on H.R. 1815.
An amendment in the nature of a substitute was offered by
Subcommittee Chairman Van Orden. This amendment in the nature
of a substitute would strike a specific termination date and
change it to three years after enactment of the law. This
amendment in the nature of a substitute would also remove the
interest rate on the partial claim to be in line with other
federal home loan programs. This amendment was agreed to by
voice vote.
Ranking Member Pappas offered a substitute amendment to
H.R. 1815, as amended. This amendment would require VA to carry
out the VA Service Purchase Program (VASP) by amending the
statute. This substitute amendment would also allow VA to pay
the servicer any unpaid loan balance plus accrued interest.
Subcommittee Ranking Member Pappas requested a recorded vote on
this substitute amendment. This amendment failed by recorded
vote of 5-3.
Ranking Member Pappas offered a substitute amendment to
H.R. 1815, as amended. This amendment would repeal VASP when
partial claim legislation is enacted into law. Additionally,
this substitute amendment would implement a permanent partial
claim program at VA at 30% of the unpaid principal.
Additionally, under this legislation, there would not be a
maximum number of times a veteran could use a partial claim.
The partial claim language is identical to Representative
Deluzio and Senators Tester and Brown's legislation from last
Congress. Ranking Member Pappas requested a recorded vote on
this substitute amendment. This amendment failed by a recorded
vote of 5-3.
A motion by Rep. Barrett to favorably forward H.R. 1815, as
amended, to the full Committee, was agreed to by voice vote.
Committee Consideration
On May 6, 2025, the full Committee met in an open markup
session, a quorum being present, and ordered H.R. 1815, as
amended, to be reported favorably to the House of
Representatives by voice vote. During consideration of the bill
one amendment to the amendment in the nature of a substitute
was offered by Representative Van Orden. This amendment, in the
nature of a substitute, would ensure that a partial claim does
not count against the current or existing loan guarantee. The
amendment in the nature of a substitute would also extend the
program to five years and increase the amount of unpaid
principal that could be covered by a partial claim to 25%.
An amendment to the amendment in the nature of a substitute
to H.R. 1815 was offered by Ranking Member Takano. This
amendment would allow the amount of unpaid principal balance
that could be covered by a partial claim to be increased to 30%
partial claim for veterans who missed a payment starting on
March 1, 2020, until May 1, 2025. This amendment would also
provide disaster relief when the President declares a major
disaster by permitting a veteran who is a victim of a disaster
to enter into more than one partial claim of 25%. Additionally,
this amendment would authorize funding for the Grant Per-Diem
(GPD) provision in the Dole Act. This amendment to the
amendment in the nature of a substitute was agreed to by voice
vote.
An additional amendment to the amendment in the nature of a
substitute was offered by Ranking Member Takano. This amendment
would encourage VA to continue to use the authorities under
VASP. Additionally, the amendment would create a 90-day
foreclosure moratorium after the enactment ofthe bill. This
amendment to the amendment in the nature of a substitute failed
by a recorded vote of 11-13.
A motion by Representative Bergman to report H.R. 1815, 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, one recorded vote was taken on
amendments or in connection with ordering H.R. 1815, as
amended, favorably reported to the House.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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. 1815, as amended, are to authorize
and establish a partial claim program within the VA Home Loan
Program. Additionally, the legislation would increase
authorization caps from $257 million to $344 million for the
Grant and Per-Diem program for Fiscal Years 2025 and 2026.
Earmarks and Tax and Tariff Benefits
H.R. 1815, 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
Pursuant to clause (3)(c)(3) of rule XIII of the Rules of
the House of Representatives, the following is the cost
estimate for H.R. 1969, as amended, provided by the
Congressional Budget Office (CBO) pursuant to section 402 of
the Congressional Budget Act of 1974:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The bill would:
Establish a Partial Claim Program through
which the Department of Veterans Affairs (VA) would pay
lenders amounts to prevent foreclosure on guaranteed
loans that are delinquent or in default
Temporarily increase the amounts authorized
for the Grant and Per Diem Program through which VA
awards funding to organizations to provide transitional
housing for veterans
Estimated budgetary effects would mainly stem from:
Paying partial claims to lenders to avoid
foreclosure of loans guaranteed by VA
Increasing grants to organizations providing
transitional housing for veterans
Bill summary: H.R. 1815 would temporarily increase the
amounts authorized for the Grant and Per Diem Program through
which The Department of Veterans Affairs (VA) awards funding to
organizations to provide transitional housing for veterans. The
bill also would establish a Partial Claim Program through which
VA would pay lenders amounts to prevent foreclosure on
guaranteed loans that are delinquent or in default.
Estimated Federal cost: The estimated budgetary effects of
H.R. 1815 are shown in Table 1. The bill would decrease net
direct spending by $147 million and increase spending subject
to appropriation by $146 million over the 2025-2035 period. The
costs of the legislation fall within budget function 700
(veterans benefits and services).
TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 1815
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
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2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2025-2030 2025-2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
INCREASES OR DECREASES (-) IN DIRECT SPENDING
Estimated Budget Authority...................... 11 -13 -34 -39 -41 -30 0 0 0 0 0 -146 -146
Estimated Outlays............................... 10 -14 -33 -39 -41 -30 0 0 0 0 0 -147 -147
INCREASES IN SPENDING SUBJECT TO APPROPRIATION AUTHORIZATION
Authorization................................... 75 73 0 0 0 0 0 0 0 0 0 148 148
Estimated Outlays............................... 66 71 8 1 0 0 0 0 0 0 0 146 146
--------------------------------------------------------------------------------------------------------------------------------------------------------
Basis of estimate: For this estimate, CBO assumes that H.R.
1815 will be enacted in fiscal year 2025 and that provisions
will take effect upon or soon after enactment. CBO also
estimates that outlays will follow historical spending patterns
for affected programs.
Provisions that affect spending subject to appropriation
and direct spending: Section 5 would temporarily increase the
amounts authorized for the Grant and Per Diem Program through
which VA pays a daily rate to public and nonprofit entities
that provide housing and supportive services to homeless
veterans.
Current law limits the total amount that VA can award for
those grants to $258 million each year; section 5 would raise
that limit to $344 million for 2025 and 2026. Using information
on past grant payments and historical spending patterns, CBO
estimates that the amounts paid for grants would increase by a
total of $169 million over the 2025-2035 period.
Some of the homeless veterans who would obtain services
under section 5 would be veterans who have been exposed to
environmental hazards; thus, CBO expects that some of the costs
of implementing the bill would be paid from the Toxic Exposures
Fund (TEF) established by Public Law 117-168, the Honoring our
PACT Act. The TEF is a mandatory appropriation that VA uses to
pay for health care, disability claims processing, medical
research, and information technology modernization that benefit
veterans who were exposed to environmental hazards. Additional
spending from the TEF occurs if legislation increases the costs
of similar activities that benefit veterans with such exposure.
Thus, in addition to increasing spending subject to
appropriation, enacting section 5 would increase amounts paid
from the TEF, which are classified as direct spending.
CBO projects that the proportion of costs paid by the TEF
will grow over time based on the amount of formerly
discretionary appropriations that CBO expects will be provided
through the mandatory appropriation as specified in the
Honoring our PACT Act.\1\ CBO estimates that over the 2025-2035
period, implementing section 5 would increase outlays for
spending subject to appropriation by $146 million and direct
spending by $23 million.
---------------------------------------------------------------------------
\1\For additional information about estimated spending from the
TEF, see CBO's most recent table with details about baseline
projections: https://www.cbo.gov/system/files/2025-01/60044-2025-01-
tef.pdf.
---------------------------------------------------------------------------
Direct spending: The discussion above in ``Provisions That
Affect Spending Subject to Appropriation and Direct Spending''
describes the increased authorizations for the Grant and Per
Diem Program that would increase direct spending from the TEF
under section 5. Section 3 of the bill would establish a
Partial Claim Program described below, which would decrease
direct spending. In total, the bill would decrease net direct
spending outlays by $147 million over the 2025-2035 period (see
Table 2).
Partial Claim Program. 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.\2\ Such costs are paid from mandatory
appropriations and, thus, are reflected in the budget as direct
spending.
---------------------------------------------------------------------------
\2\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.
---------------------------------------------------------------------------
Section 3 would establish a Partial Claim Program through
which VA would pay lenders amounts to prevent foreclosure on
guaranteed loans that are in or at risk of default. That amount
would cover a portion of indebtedness sufficient to prevent or
resolve the default, not to exceed 25 percent of the
outstanding mortgage balance (or 30 percent if the borrower
became delinquent before May 1, 2025). The partial claim
payment would be classified as a direct loan from VA to the
delinquent borrower. Those direct loans would be secured by a
government lien on the property and would not accrue interest.
The bill would authorize one partial claim on a loan guaranteed
by the department, unless subsequent delinquencies occur within
120 days following a major disaster declared by the President.
A partial claim would not reduce the amount of VA's guarantee
on the existing loan. The authority for the program would
expire five years after the enactment of H.R.1815. In CBO's
estimation, that program also would reduce costs of the loan
guarantees the VA provides.
Using its projection of loan volume based on data provided
by VA, CBO expects that VA will pay roughly 12,200 partial
claims on behalf of borrowers at an average amount of $27,200
over the course of the program. In addition, CBO estimates that
some of those loans would not be repaid by the borrowers. The
combination of defaults and lack of interest income result in a
subsidy rate of 37 percent and total subsidy costs of $124
million over the 2025-2035 period, CBO estimates.
Other Loan Effects. In addition to the costs described
above, CBO expects that the partial claims payments under
section 3 would reduce the number of foreclosures on guaranteed
loans. As a result, they would reduce the net amount that VA
pays related to defaults on those guaranteed loans by an
estimated $294 million over the 2025-2035 period.
Taken together, CBO estimates that enacting section 3 would
decrease net direct spending by $170 million over the 2025-2035
period.
TABLE 2.--ESTIMATED INCREASES IN DIRECT SPENDING UNDER H.R. 1815
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
-------------------------------------------------------------------------------------------------------
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2025-2030 2025-2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
Partial Claim Program:
Estimate Budget Authority................... 0 23 25 26 28 22 0 0 0 0 0 124 124
Estimated Outlays........................... 0 23 25 26 28 22 0 0 0 0 0 124 124
Other Loan Effects:
Estimate Budget Authority................... 0 -49 -59 -65 -69 -52 0 0 0 0 0 -294 -294
Estimated Outlays........................... 0 -49 -59 -65 -69 -52 0 0 0 0 0 -294 -294
Grant & Per Diem:
Estimate Budget Authority................... 11 13 0 0 0 0 0 0 0 0 0 24 24
Estimated Outlays........................... 10 12 1 * 0 0 0 0 0 0 0 23 23
Total Changes:
Estimate Budget Authority............... 11 -13 -34 -39 -41 -30 0 0 0 0 0 -146 -146
Estimated Outlays....................... 10 -14 -33 -39 -41 -30 0 0 0 0 0 -147 -147
--------------------------------------------------------------------------------------------------------------------------------------------------------
*=between zero and $500,000.
Spending subject to appropriation: The discussion above in
``Provisions That Affect Spending Subject to Appropriation and
Direct Spending'' describes the increased authorizations for
the Grant and Per Diem Program that would increase spending
subject to appropriation under section 5, totaling $146 million
over the 2025-2035 period (see Table 3).
TABLE 3.--ESTIMATED INCREASES IN SPENDING SUBJECT TO APPROPRIATION UNDER H.R. 1815
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
---------------------------------------------------------------------------------------------------
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2025-2030 2025-2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
Grant & Per Diem:
Authorization................................... 75 73 0 0 0 0 0 0 0 0 0 148 148
Estimated Outlays............................... 66 71 8 1 0 0 0 0 0 0 0 146 146
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays that are subject to those
pay-as-you-go procedures are shown in Table 2.
Increase in long-term net direct spending and deficits: CBO
estimates that enacting H.R. 1815 would not increase net direct
spending or on-budget deficits in any of the four consecutive
10-year periods beginning in 2036.
Mandates: H.R. 1815 contains an intergovernmental and
private-sector mandate, as defined in the Unfunded Mandates
Reform Act (UMRA). By not allowing judicial review of the
Department of Veterans Affairs decision to obtain secured
interest in a veteran's defaulted home loan, the bill would
eliminate an existing right of action for any public or private
entity that would otherwise be able to seek judicial review.
There is no cost associated with this mandate because judicial
review does not result in monetary damages; the cost is
therefore well below the thresholds established in UMRA for
intergovernmental and private-sector mandates ($103 million and
$206 million in 2025, respectively, adjusted annually for
inflation).
Estimate prepared by: Federal costs: Paul B.A. Holland;
Mandates: Grace Watson.
Estimate reviewed by: David Newman, Chief, Defense,
International Affairs, and Veterans' Affairs Cost Estimates
Unit; Kathleen FitzGerald, Chief, Public and Private Mandates
Unit; Christina Hawley Anthony, Deputy Director of Budget
Analysis.
Estimate approved by: 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. 1815, 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.
1815, as amended.
Applicability to Legislative Branch
The Committee finds that H.R. 1815, 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. 1815, 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
This section would establish the short title of the bill as
the ``VA Home Loan Program Reform Act.''
Section 2. Authority of the Secretary of Veterans Affairs to take
certain actions in the case of a default on the home loan
guaranteed by the Secretary
This section would amend 38 U.S.C. Sec. 3732 by adding in a
subsection that would grant VA the authority to establish ae
partial claim option as part of the loss mitigation waterfall
process before foreclosure. Under this subsection the VA
Secretary shall, on a random sampling basis, post a payment
audit to ensure compliance with the requirements. The VA
Secretary would also be required to establish a mandatory
sequence for the loss mitigation waterfall within the VA Home
Loan program.
Section 3. Partial claim program of the Department of Veterans Affairs
This section would amend Subchapter III of chapter 37 of
Title 38 in order to establish and implement a partial claim
program at VA. The payments made to a lender under the partial
claim program to bring a mortgage loan up-to-date would not
count against the 25% that VA guarantees to pay the original
lender if there is a foreclosure. The partial claim would pay
up to 25% of the unpaid principal balance to the lender to
bring a loan up-to-date. This section would also provide
disaster relief if the President declares a major disaster. A
veteran or servicemember would be eligible for an additional
partial claim of 25% during the duration of the declaration, or
for 120 days after the President declares the major disaster.
Specific individuals who were working through other loss
mitigation options due to COVID-19 up until May 1, 2025, may
also qualify for a partial claim up to 30% of their unpaid
principal balance to account for extra arrears that may exist
because of the foreclosure moratorium that existed during that
time period. This section would establish the right to recovery
by VA when an individual defaults on their mortgage payment
even after using a partial claim. This section would terminate
the program five years after the enactment of this law.
Section 4: Strategy of the Secretary of Veterans Affairs regarding the
effect of certain litigation
This section would require that no later than 90 days after
the date of enactment of this Act that the VA Secretary shall
submit to the House and Senate Committees on Veterans' Affairs
a report on the strategy the VA Secretary will use to ensure
that veterans remain competitive in the real estate market and
secure representation to ensure that veterans are not at a
disadvantage in the marketplace.
Section 5: Increase authorizations of appropriations for comprehensive
service programs for homeless veterans
This section would authorize funding for the Grant Per Diem
(GPD) program by amending 38 U.S.C. Sec. 2016 in paragraph 7 by
striking ``fiscal year 2015 and each subsequent year after''
and inserting ``each of the fiscal years 2015 through 2024.''
Adding in a new subsection that would increase authorizations
from $257,000,000 to $344,000,000 for Fiscal Years 2025 and
2026. Beginning in 2027, authorizations would return to
$257,000,000.
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 II--GENERAL BENEFITS
* * * * * * *
CHAPTER 20--BENEFITS FOR HOMELESS VETERANS
* * * * * * *
SUBCHAPTER II--COMPREHENSIVE SERVICE PROGRAMS
* * * * * * *
Sec. 2016. Authorization of appropriations
There is authorized to be appropriated to carry out this
subchapter amounts as follows:
(1) $150,000,000 for each of fiscal years 2007
through 2009.
(2) $175,100,000 for fiscal year 2010.
(3) $217,700,000 for fiscal year 2011.
(4) $250,000,000 for fiscal year 2012.
(5) $250,000,000 for fiscal year 2013.
(6) $250,000,000 for fiscal year 2014.
(7) $257,700,000 for [fiscal year 2015 and each
subsequent fiscal year] each of fiscal years 2015
through 2024.
(8) $344,000,000 for each of fiscal years 2025 and
2026.
(9) $257,700,000 for each fiscal year thereafter.
* * * * * * *
PART III--READJUSTMENT AND RELATED BENEFITS
* * * * * * *
CHAPTER 37--HOUSING AND SMALL BUSINESS LOANS
SUBCHAPTER I--GENERAL
Sec.
3701. Definitions.
* * * * * * *
3737. Partial Claim Program.
* * * * * * *
SUBCHAPTER III--ADMINISTRATIVE PROVISIONS
Sec. 3720. Powers of Secretary
(a) [Notwithstanding] Except as provided in subsection (h),
notwithstanding the provisions of any other law, with respect
to matters arising by reason of this chapter, the Secretary
may--
(1) sue and be sued in the Secretary's official
capacity in any court of competent jurisdiction, State
or Federal, but nothing in this clause shall be
construed as authorizing garnishment or attachment
against the Secretary, the Department of Veterans
Affairs, or any of its employees;
(2) subject to specific limitations in this chapter,
consent to the modification, with respect to rate of
interest, time of payment of principal or interest or
any portion thereof, security or other provisions of
any note, contract, mortgage or other instrument
securing a loan which has been guaranteed, insured,
made or acquired under this chapter;
(3) pay, or compromise, any claim on, or arising
because of, any such guaranty or insurance;
(4) pay, compromise, waive or release any right,
title, claim, lien or demand, however acquired,
including any equity or any right of redemption;
(5) purchase at any sale, public or private, upon
such terms and for such prices as the Secretary
determines to be reasonable, and take title to,
property, real, personal or mixed; and similarly sell,
at public or private sale, exchange, assign, convey, or
otherwise dispose of any such property; and
(6) complete, administer, operate, obtain and pay for
insurance on, and maintain, renovate, repair,
modernize, lease, or otherwise deal with any property
acquired or held pursuant to this chapter. The
acquisition of any such property shall not deprive any
State or political subdivision thereof of its civil or
criminal jurisdiction of, on, or over such property
(including power to tax) or impair the rights under the
State or local law of any persons on such property.
Without regard to section 3302(b) of title 31 or any
other provision of law not expressly in limitation of
this paragraph, the Secretary may permit brokers
utilized by the Secretary in connection with such
properties to deduct from rental collections amounts
covering authorized fees, costs, and expenses incurred
in connection with the management, repair, sale, or
lease of any such properties and remit the net balances
to the Secretary.
(b) The powers granted by this section may be exercised by
the Secretary without regard to any other provision of law not
enacted expressly in limitation of this section, which
otherwise would govern the expenditure of public funds, except
that division C (except sections 3302, 3501(b), 3509, 3906,
4710, and 4711) of subtitle I of title 41 shall apply to any
contract for services or supplies on account of any property
acquired pursuant to this section.
(c) The financial transactions of the Secretary incident to,
or arising out of, the guaranty or insurance of loans pursuant
to this chapter, and the acquisition, management, and
disposition of property, real, personal, or mixed, incident to
such activities and pursuant to this section, shall be final
and conclusive upon all officers of the Government.
(d) The right to redeem provided for by section 2410(c) of
title 28 shall not arise in any case in which the subordinate
lien or interest of the United States derives from a guaranteed
or insured loan.
[(f)] (e) Whenever loss, destruction, or damage to any
residential property securing loans guaranteed, insured, made,
or acquired by the Secretary under this chapter occurs as the
result of a major disaster as determined by the President under
the Disaster Relief and Emergency Assistance Act (42 U.S.C.
5121 et seq.), the Secretary shall (1) provide counseling and
such other service to the owner of such property as may be
feasible and shall inform such owner concerning the disaster
assistance available from other Federal agencies and from State
or local agencies, and (2) pursuant to subsection (a)(2) of
this section, extend on an individual case basis such
forebearance or indulgence to such owner as the Secretary
determines to be warranted by the facts of the case and the
circumstances of such owner.
[(g)] (f) The Secretary shall, at the request of the
Secretary of Housing and Urban Development and without
reimbursement, certify to such Secretary whether an applicant
for assistance under any law administered by the Department of
Housing and Urban Development is a veteran.
[(h)] (g) The Secretary may, upon such terms and conditions
as the Secretary considers appropriate, issue or approve the
issuance of, and guarantee the timely payment of principal and
interest on, certificates or other securities evidencing an
interest in a pool of mortgage loans made in connection with
the sale of properties acquired under this chapter.
(h) The Secretary may not take any action under paragraph
(2), (3), (4), or (5) of subsection (a) with respect to a loan
guaranteed under this chapter before the completion of the
sequence of mitigation options offered to the veteran to whom
the loan is made under section 3732(d) of this title.
* * * * * * *
Sec. 3732. Procedure on default
(a)(1) In the event of default in the payment of any loan
guaranteed under this chapter, the holder of the [obligation]
loan shall notify the Secretary of such default. Upon receipt
of such notice, the Secretary may, subject to subsection (c) of
this section, pay to such holder the guaranty not in excess of
the pro rata portion of the amount originally guaranteed.
Except as provided in section 3703(e) of this title, if the
Secretary makes such a payment, the Secretary shall be
subrogated to the rights of the holder of the [obligation] loan
to the extent of the amount paid on the guaranty.
(2)[(A) Before suit or foreclosure the holder of the
obligation shall notify the Secretary of the default, and
within thirty days thereafter the Secretary may, at the
Secretary's option, pay the holder of the obligation the unpaid
balance of the obligation plus accrued interest and receive an
assignment of the loan and security. Nothing in this section
shall preclude any forebearance for the benefit of the veteran
as may be agreed upon by the parties to the loan and approved
by the Secretary.] (A) The Secretary may, under terms and
conditions determined by the Secretary--
(i) pay the holder of a loan guaranteed under this
chapter an amount necessary to avoid the foreclosure of
such loan;
(ii) require the holder of the loan and the veteran
obligated on the loan to execute all documents
necessary to ensure the Secretary obtains a secured
interest in the property covered by the loan; and
(iii) require the holder of the loan to take any
actions necessary to carry out this paragraph,
including preparing, executing, transmitting,
receiving, and recording documents, and requiring the
holder of the loan to place the loan in forbearance.
(B) In the event that a housing loan guaranteed under this
chapter is modified under the authority provided under section
1322(b) of title 11, the Secretary may pay the holder of the
[obligation] housing loan the unpaid principal balance of the
[obligation] housing loan due, plus accrued interest, as of the
date of the filing of the petition under title 11, but only
upon the assignment, transfer, and delivery to the Secretary
(in a form and manner satisfactory to the Secretary) of all
rights, interest, claims, evidence, and records with respect to
the housing loan.
(C)(i) Any decision by the Secretary under this paragraph is
final and is not subject to judicial review.
(ii) For purposes of section 511 of this title, any decision
under this paragraph shall not be treated as a decision under a
law that affects the provision of benefits.
(D)(i) The Secretary may establish standards for processing
payments under this paragraph based on a certification by a
holder of a loan guaranteed under this chapter that the holder
has complied with all applicable requirements established by
the Secretary.
(ii) The Secretary shall carry out, on a random-sampling
basis, post-payment audits to ensure compliance with all
requirements described in clause (i).
(3) The Secretary may establish the date, not later than the
date of judgment and decree of foreclosure or sale, upon which
accrual of interest or charges shall cease.
(4)(A) Upon receiving a notice pursuant to paragraph (1) of
this subsection, the Secretary shall--
(i) provide the veteran with information and, to the
extent feasible, counseling regarding--
(I) alternatives to foreclosure, as
appropriate in light of the veteran's
particular circumstances, including possible
methods of curing the default, conveyance of
the property to the Secretary by means of a
deed in lieu of foreclosure, and the actions
authorized by paragraph (2) of this subsection;
and
(II) what the Department of Veterans Affairs'
and the veteran's liabilities would be with
respect to the loan in the event of
foreclosure; and
(ii) advise the veteran regarding the availability of
such counseling;
except with respect to loans made by a lender which the
Secretary has determined has a demonstrated record of
consistently providing timely and accurate information to
veterans with respect to such matters.
(B) The Secretary shall, to the extent of the availability of
appropriations, ensure that sufficient personnel are available
to administer subparagraph (A) of this paragraph effectively
and efficiently.
(5) In the event of default in the payment of any loan
guaranteed or insured under this chapter in which a partial
payment has been tendered by the veteran concerned and refused
by the holder, the holder of the [obligation] loan shall notify
the Secretary as soon as such payment has been refused. The
Secretary may require that any such notification include a
statement of the circumstances of the default, the amount
tendered, the amount of the indebtedness on the date of the
tender, and the reasons for the holder's refusal.
(b) With respect to any loan made under section 3711 which
has not been sold as provided in subsection (g) of such
section, if the Secretary finds, after there has been a default
in the payment of any installment of principal or interest
owing on such loan, that the default was due to the fact that
the veteran who is obligated under the loan has become
unemployed as the result of the closing (in whole or in part)
of a Federal installation, the Secretary shall (1) extend the
time for curing the default to such time as the Secretary
determines is necessary and desirable to enable such veteran to
complete payments on such loan, including an extension of time
beyond the stated maturity thereof, or (2) modify the terms of
such loan for the purpose of changing the amortization
provisions thereof by recasting, over the remaining term of the
loan, or over such longer period as the Secretary may
determine, the total unpaid amount then due with the
modification to become effective currently or upon the
termination of an agreed-upon extension of the period for
curing the default.
(c)(1) For purposes of this [subsection--] subsection:
(A) The term ``defaulted loan'' means a loan that is
guaranteed under this chapter, that was made for a
purpose described in section 3710(a) of this title, and
that is in default.
(B) The term ``liquidation sale'' means a judicial
sale or other disposition of real property to liquidate
a defaulted loan that is secured by such property.
(C) The term ``net value'', with respect to real
property, means the amount equal to (i) the fair market
value of the property, minus (ii) the total of the
amounts which the Secretary estimates the Secretary
would incur (if the Secretary were to acquire and
dispose of the property) for property taxes,
assessments, liens, property maintenance, property
improvement, administration, resale (including losses
sustained on the resale of the property), and other
costs resulting from the acquisition and disposition of
the property, excluding any amount attributed to the
cost to the Government of borrowing funds.
(D) Except as provided in subparagraph (D) of
paragraph (10) of this subsection, the term ``total
indebtedness'', with respect to a defaulted loan, means
the amount equal to the total of (i) the unpaid
principal of the loan, (ii) the interest on the loan as
of the date applicable under paragraph (10) of this
subsection, and (iii) such reasonably necessary and
proper charges (as specified in the loan instrument and
permitted by regulations prescribed by the Secretary to
implement this subsection) associated with liquidation
of the loan, including advances for taxes, insurance,
and maintenance or repair of the real property securing
the loan.
(2)(A) Except as provided in subparagraph (B) of this
paragraph, this subsection applies to any case in which the
holder of a defaulted loan undertakes to liquidate the loan by
means of a liquidation sale.
(B) This subsection does not apply to a case in which the
Secretary proceeds under subsection (a)(2) of this section.
(3)(A) Before carrying out a liquidation sale of real
property securing a defaulted loan, the holder of the loan
shall notify the Secretary of the proposed sale. Such notice
shall be provided in accordance with regulations prescribed by
the Secretary to implement this subsection.
(B) After receiving a notice described in subparagraph (A) of
this paragraph, the Secretary shall determine the net value of
the property securing the loan and the amount of the total
indebtedness under the loan and shall notify the holder of the
loan of the determination of such net value.
(4) A case referred to in paragraphs (5), (6), and (7) of
this subsection as being described in this paragraph is a case
in which the net value of the property securing a defaulted
loan exceeds the amount of the total indebtedness under the
loan minus the amount guaranteed under this chapter.
(5) In a case described in paragraph (4) of this subsection,
if the holder of the defaulted loan acquires the property
securing the loan at a liquidation sale for an amount that does
not exceed the lesser of the net value of the property or the
total indebtedness under the loan--
(A) the holder shall have the option to convey the
property to the United States in return for payment by
the Secretary of an amount equal to the lesser of such
net value or total indebtedness; and
(B) the liability of the United States under the loan
guaranty under this chapter shall be limited to the
amount of such total indebtedness minus the net value
of the property.
(6) In a case described in paragraph (4) of this subsection,
if the holder of the defaulted loan does not acquire the
property securing the loan at the liquidation sale, the
liability of the United States under the loan guaranty under
this chapter shall be limited to the amount equal to (A) the
amount of such total indebtedness, minus (B) the amount
realized by the holder incident to the sale or the net value of
the property, whichever is greater.
(7) In a case described in paragraph (4) of this subsection,
if the holder of the defaulted loan acquires the property
securing the loan at the liquidation sale for an amount that
exceeds the lesser of the total indebtedness under the loan or
the net value and--
(A)(i) the amount was the minimum amount for which,
under applicable State law, the property was permitted
to be sold at the liquidation sale, the holder shall
have the option to convey the property to the United
States in return for payment by the Secretary of an
amount equal to the lesser of the amount for which the
holder acquired the property or the total indebtedness
under the loan; or
(ii) there was no minimum amount for which the
property had to be sold at the liquidation sale under
applicable State law, the holder shall have the option
to convey the property to the United States in return
for payment by the Secretary of an amount equal to the
lesser of such net value or total indebtedness; and
(B) the liability of the United States under the loan
guaranty under this chapter is as provided in paragraph
(6) of this subsection.
(8) If the net value of the property securing a defaulted
loan is not greater than the amount of the total indebtedness
under the loan minus the amount guaranteed under this chapter--
(A) the Secretary may not accept conveyance of the
property from the holder of the loan; and
(B) the liability of the United States under the loan
guaranty shall be limited to the amount of the total
indebtedness under the loan minus the amount realized
by the holder of the loan incident to the sale at a
liquidation sale of the property.
(9) In no event may the liability of the United States under
a guaranteed loan exceed the amount guaranteed with respect to
that loan under section 3703(b) of this title. All
determinations under this subsection of net value and total
indebtedness shall be made by the Secretary.
(10)(A) Except as provided in subparagraphs (B) and (C) of
this paragraph, the date referred to in paragraph (1)(D)(ii) of
this subsection shall be the date of the liquidation sale of
the property securing the loan (or such earlier date following
the expiration of a reasonable period of time for such sale to
occur as the Secretary may specify pursuant to regulations
prescribed by the Secretary to implement this subsection).
(B)(i) Subject to division (ii) of this subparagraph, in any
case in which there is a substantial delay in such sale caused
by the holder of the loan exercising [forebearance] forbearance
at the request of the Secretary, the date referred to in
paragraph (1)(D)(ii) of this subsection shall be such date, on
or after the date on which [forebearance] forbearance was
requested and prior to the date of such sale, as the Secretary
specifies pursuant to regulations which the Secretary shall
prescribe to implement this paragraph.
(ii) The Secretary may specify a date under subdivision (i)
of this subparagraph only if, based on the use of a date so
specified for the purposes of such paragraph (1)(D)(ii), the
Secretary is authorized, under paragraph (5)(A) or (7)(A) of
this subsection, to accept conveyance of the property.
(C) In any case in which there is an excessive delay in such
liquidation sale caused--
(i) by the Department of Veterans Affairs (including
any delay caused by its failure to provide bidding
instructions in a timely fashion); or
(ii) by a voluntary case commenced under title 11,
United States Code (relating to bankruptcy);
the date referred to in paragraph (1)(D)(ii) of this subsection
shall be a date, earlier than the date of such liquidation
sale, which the Secretary specifies pursuant to regulations
which the Secretary shall prescribe to implement this
paragraph.
(D) For the purpose of determining the liability of the
United States under a loan guaranty under paragraphs (5)(B),
(6), (7)(B), and (8)(B), the amount of the total indebtedness
with respect to such loan guaranty shall include, in any case
in which there was an excessive delay caused by the Department
of Veterans Affairs in the liquidation sale of the property
securing such loan, any interest which had accrued as of the
date of such sale and which would not be included, except for
this subparagraph, in the calculation of such total
indebtedness as a result of the specification of an earlier
date under subparagraph (C)(i) of this paragraph.
(d) The Secretary shall prescribe loss mitigation procedures,
including a mandatory sequence in which the holder of a loan
guaranteed under this chapter shall offer loss mitigation
options (including an option to enter into a partial claim
agreement under the VA Home Loan Program Reform Act) to a
veteran, to help prevent the foreclosure of such loan. The
Secretary may not purchase an entire such loan until the
veteran has completed such sequence.
* * * * * * *
Sec. 3737. Partial Claim Program
(a) Establishment.--The Secretary shall carry out a program,
to be known as the ``Partial Claim Program'', under which the
Secretary may make a partial claim, described in subsection
(b), with respect to a loan--
(1) guaranteed under this chapter;
(2) regarding the primary residence of the borrower;
and
(3) that the Secretary determines is in default or at
imminent risk of default.
(b) Partial Claim Described.--A partial claim described in
this subsection, with respect to a loan described in subsection
(a), is the purchase by the Secretary of a portion of
indebtedness under the loan, through a transaction under which
the Secretary--
(1) pays to the holder of the loan the amount of
indebtedness, subject to subsection (c), that the
Secretary determines necessary to help prevent or
resolve a default; and
(2) receives a secured interest in the property that
serves as collateral for the guaranteed loan, which is
subordinate to the first lien guaranteed loan for such
property.
(c) Administration of Partial Claim.--(1)(A) Subject to
subparagraph (B), the amount of a partial claim under this
section with respect to a loan guaranteed described in
subsection (a) may not exceed 25 percent of the unpaid
principal balance of the loan on the date on which the partial
claim is made.
(B) In the case of an individual who failed to make a payment
on a loan guaranteed under this chapter during the period
beginning on March 1, 2020 and ending on May 1, 2025, the
amount of a partial claim under this section may not exceed 30
percent of the unpaid principal balance of the guaranteed loan
as of the date that the initial partial claim is made.
(2)(A) Subject to subparagraph (B), the Secretary may make
only one partial claim per loan.
(B) The Secretary may make an additional partial claim on a
loan guaranteed under this chapter in the case of an individual
who failed to make a payment on such loan during--
(i) a major disaster declared by the President under
section 401 of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C. 5170); or
(ii) the period of 120 days following such a major
disaster.
(3) An amount paid to the holder of a loan as a partial
claim--
(A) shall not count against the amount of a loan that
may otherwise be guaranteed under this chapter; and
(B) may not be applied to the portion of the loan
that is guaranteed under this chapter.
(4) A holder of a loan guaranteed under such chapter for
which the Secretary makes a partial claim under this section
shall apply the amount paid by the Secretary for the partial
claim first to arrearages, if any, on the guaranteed loan. Such
arrearages may include any additional costs (such as taxes,
insurance premiums, or homeowner's dues) the Secretary
determines necessary to prevent or resolve a default.
(5) The Secretary may enter into a contract with an
appropriate entity for the service of a partial claim made by
the Secretary under this section. Any such contract shall
provide that such entity shall provide quarterly statements to
the holder of the loan for which the Secretary makes the
partial claim.
(d) Requirements of Loan Holder.--(1) The Secretary may
require the holder of a loan for which the Secretary makes a
partial claim under this section to take any actions necessary
to establish the partial claim, including preparing, executing,
transmitting, receiving, and recording loan documents.
(2) The Secretary shall compensate the holder of such a loan
appropriately, as determined by the Secretary, for the services
required of such holder under this subsection.
(3) The Secretary may exercise the authority of the Secretary
under this subsection without regard to any other provision of
law not enacted expressly in limitation of this section that
would otherwise govern the expenditure of public funds.
(e) Default and Foreclosure.--(1)(A) Notwithstanding section
3703(e) of this title, an individual who defaults on a loan for
which the Secretary makes a partial claim made under this
section shall be liable to the Secretary for any loss suffered
by the Secretary resulting from such default. Such a loss may
be recovered in the same manner as any other debt due the
United States.
(B) In the event of default by an individual on a loan for
which the Secretary makes a partial claim made under this
section, the Secretary may reduce the aggregate amount of
guaranty or insurance housing loan entitlement available to the
individual under this chapter.
(2) Notwithstanding section 2410(c) of title 28, an action to
foreclose a lien held by the United States arising under a
partial claim made under this section shall follow foreclosure
procedures in accordance with State or local law where the
property involved is located.
(f) Decisions by the Secretary.--(1) Any partial claim made
under this section shall be made in the sole discretion of the
Secretary and on terms and conditions acceptable to the
Secretary that are consistent with this section.
(2) Any decision by the Secretary under this section is final
and conclusive and is not subject to judicial review.
(3) For purposes of section 511 of this title, any decision
under this section shall not be treated as a decision under a
law that affects the provision of benefits.
(g) Compliance.--(1) The Secretary may establish standards
for processing payments under this section based on a
certification by a holder of a loan guaranteed under such
chapter that the holder has complied with all applicable
requirements established by the Secretary.
(2) The Secretary shall carry out, on a random-sampling
basis, post-payment audits to ensure compliance with all
requirements under paragraph (1).
(h) Guidance With Respect to Certain Loans.--(1) With respect
to a loan described in paragraph (2), the Secretary may--
(A) before prescribing regulations, issue
administrative guidance regarding the making of a
partial claim relating to such loan; and
(B) establish, through such guidance, additional
requirements applicable to such a partial claim.
(2) A loan described in this paragraph is a loan that the
Secretary determines was in default on the date of the
enactment of this section.
(i) Rule of Construction.--Nothing in this section shall be
construed to limit the authority of the Secretary under
subsections (a) and (d) of section 3732 of this title.
(j) Termination.--The Secretary may not make a partial claim
under this section after the date that is five years after the
date of the enactment of this section.
* * * * * * *
MINORITY VIEWS
INTRODUCTION
The creation of the GI Bill during World War II offered
returning servicemembers significant assistance as they began
the readjustment to civilian life. In addition to the
educational benefit that could provide job training and
improved employment outcomes, the GI Bill offered these newly
transitioned veterans a leg up to buy a home. The first ten
years of this benefit represented twenty percent of all U.S.
home purchases.\1\ The terms of the program offered veterans a
way to close on a home with limited money down, competitive
mortgage rates, and expanded protections to prevent
foreclosure.
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\1\https://www.archives.gov/milestone-documents/servicemens-
readjustment-act.
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Historically, VA has used the authorities granted as part
of the VA Loan Guarantee program to historically keep
foreclosure rates as the lowest among major loan types.\2\
However, these low rates of foreclosure were a reflection of
existing authorities and their dependence on consistently low
30-year mortgage rates from banks.
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\2\https://www.mba.org/news-and-research/newsroom/news/2025/05/13/
mortgage-delinquencies-increase-slightly-in-the-first-quarter-of-2025.
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During the COVID-19 pandemic, there was a severe rise in
the number of missed mortgage payments among veterans. Combined
with rising 30-year mortgage rates, the long-used VA
foreclosure mitigation measures lost their effectiveness. This
led to the Biden Administration to use several existing
authorities to help as many veterans as possible to avoid
foreclosure. According to VA data, in 2023 alone, these
authorities helped over 145,000 veterans and their families
avoid foreclosure.\3\
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\3\https://news.va.gov/press-room/va-servicing-purchase-program-
avoid-foreclosure/.
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In 2024, President Biden built off these successes at VA
and offered veterans and servicemembers with delinquencies a
new program to avoid foreclosure, the Veteran Affairs Servicing
Purchase (VASP) program. This program offered the delinquent
payers a way to refinance into rates not available in the open
market. From program creation, 18,000 borrowers used VASP prior
to the Trump Administration abruptly ending this program on May
1, 2025.
DIRE RISK TO VETERAN FORECLOSURES
According to lenders and housing trade groups, upwards of
60,000 to 85,000 VA borrowers are still severely delinquent on
their mortgage payments. This means they have missed more than
three consecutive months of payments. As mortgage rates in the
open market remain high compared to recent years, and with the
closure of the VASP program, the only options available to
these borrowers are either selling their home or being
foreclosed upon. As VASP was the program of last resort, ending
VASP has accelerated the risk to these borrowers.
Subcommittee Chairman Van Orden has called VASP a
``disaster,'' referred to a veteran facing foreclosure as ``bum
loan,'' and has repeatedly urged VA to end the program--even as
officials in the Trump VA and other witnesses testified to the
program's successes. As recently as March 11, 2025, the VA
reported, ``We continue to see strong performance from our VA
portfolio. Matter of fact, we're up in every category from a
loan guarantee standpoint. We are up a year over year in
purchase and refinance as well as, you know, our comparative
default ratios versus other programs. So, we're continuing to
see VA perform very well against its competition.''\4\
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\4\House Veterans' Affairs Subcommittee on Economic Opportunity
Legislative Hearing, March 11, 2025. Bell, John.
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The Mortgage Bankers Association also testified on March
11, 2025, that VASP ``has provided critical relief to thousands
of veterans whose loan payments became unaffordable in today's
higher rate environment. While partial claims should be the
first line of defense, VASP has been an essential safety net
for borrowers who had no other options. Without VASP, VA would
have foreclosed on tens of thousands of borrowers.''\5\ That is
the reality borrowers now face.
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\5\House Veterans' Affairs Subcommittee on Economic Opportunity
Legislative Hearing, March 11, 2025. Balce, Elizabeth.
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Democratic Members of the Committee continue to call on VA
to reinstate VASP\6\ (at least in the interim and until an
alternative program is offered) and offer the program to these
tens of thousands of borrowers. Helping veteran borrowers
upholds the goals and ideals of the VA Loan Guarantee program--
which promised veterans an easy entry point to home ownership.
Further, the program is meant to offer protections to veterans
to only allow foreclosure in the most extreme circumstances. As
of the date of this report, President Trump and Secretary
Collins have refused to offer these borrowers any options
beyond already exhausted program options.
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\6\https://democrats-veterans.house.gov/news/press-releases/
ranking-members-takano-and-blumenthal-denounce-va-decision-to-end-
program-helping-veterans-stay-in-their-homes.
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IMPLEMENTATION TIMELINE
Based on prior Government Accountability Office (GAO)
reports,\7\ foreclosures cost VA an estimated $60,000 per loan
and are always the most expensive option for the agency. Short
of VA reinstating VASP or putting in place a foreclosure
moratorium prior to enactment and implementation of H.R. 1815
as amended into law, the agency is likely to incur significant
costs while placing even more financial and emotional costs on
veterans.
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\7\https://www.gao.gov/products/rced-90-4.
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Committee on House Veterans' Affairs Democrats urge the
Trump administration to take all possible administration
actions, including but not necessarily limited to, reinstating
VASP, or issuing a foreclosure moratorium while this
legislation works its way through Congress and potentially
becomes law and is implemented.
Veterans who are at risk of foreclosure, and who would use
the authorities granted by H.R. 1815, as amended, to avoid such
foreclosure, should be offered assistance instead of being
unfairly punished by the unknown timetable to move H.R. 1815,
as amended, from law to functional program.
GRANT PER DIEM FUNDING
Public Law 118-210, the Senator Elizabeth Dole 21st Century
Veterans Healthcare and Benefits Improvement Act authorized
increased per diem payments from VA to homeless providers.\8\
However, while S. 141 included offsets identified by the
Congressional Budget Office and required by Republican House
Rules to cover the cost of these per diem payments for the next
three years, VA shared with Congress that they lack authorities
to carry out this portion of law.
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\8\P.L. 118-210.
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H.R. 1815 as amended includes authorization for funding for
the next two years of these payments, however the Committee
holds that these provisions should not require a second offset
when they have already been offset as part of S. 141. Committee
Democrats recommend that the House Budget Committee not require
further offsets for Fiscal Year 2027. The three years of
increased funding granted by S. 141, along with H.R. 1815, as
amended, for grant per diem payments in lieu of a permanent
authorization of these authorities is based on an agreement
between House and Senate Veterans' Affairs Committees (Majority
and Minority) to determine a more appropriate method to
calculate adequate payments to providers in the future.
Mark Takano,
Ranking Member.
[all]