[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1815 Introduced in House (IH)]
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119th CONGRESS
1st Session
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 3, 2025
Mr. Van Orden introduced the following bill; which was referred to the
Committee on Veterans' Affairs
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A BILL
To amend title 38, United States Code, to authorize the Secretary of
Veterans Affairs to take certain actions in the case of a default on a
home loan guaranteed by the Secretary, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``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 as determined
by the Secretary--
``(i) pay the holder of a loan guaranteed under this
chapter an amount necessary to avoid the foreclosure of such
loan;
``(ii) require the holder of the loan and the veteran
obligated on the loan to execute all documents necessary to
ensure the Secretary obtains a secured interest in the property
covered by the loan; and
``(iii) require the holder of the loan to take any actions
necessary to carry out this paragraph, including preparing,
executing, transmitting, receiving, and recording documents,
and requiring the holder of the loan to place the loan in
forbearance.'';
(ii) in subparagraph (B), by striking
``obligation'' each place it appears and
inserting ``housing loan''; and
(iii) by adding at the end the following
new subparagraphs:
``(C)(i) Any decision by the Secretary under this paragraph is
final and is not subject to judicial review.
``(ii) For purposes of section 511 of this title, any decision
under this paragraph shall not be treated as a decision under a law
that affects the provision of benefits.
``(D)(i) The Secretary may establish standards for processing
payments under this paragraph based on a certification by a holder of a
loan guaranteed under this chapter that the holder has complied with
all applicable requirements established by the Secretary.
``(ii) The Secretary shall carry out, on a random-sampling basis,
post-payment audits to ensure compliance with all requirements
described in clause (i).''; and
(C) in paragraph (5), by striking ``obligation''
and inserting ``loan'';
(2) in subsection (c)(10)(B)(i), by striking
``forebearance'' each place it appears and inserting
``forbearance''; and
(3) by adding at the end the following new subsection:
``(d) The Secretary shall prescribe loss mitigation procedures,
including a mandatory sequence in which the holder of a loan guaranteed
under this chapter shall offer loss mitigation options (including an
option to enter into a partial claim agreement under the VA Home Loan
Program Reform Act) to a veteran, to help prevent the foreclosure of
such loan. The Secretary may not purchase an entire such loan until the
veteran has completed such sequence.''.
(b) Relationship to Other Powers of Secretary.--Section 3720 of
such title is amended--
(1) in subsection (a), by striking ``Notwithstanding'' and
inserting ``Except as provided in subsection (h),
notwithstanding'';
(2) by redesignating subsections (f) through (h) as
subsections (e) through (g), respectively; and
(3) by adding at the end the following new subsection (h):
``(h) The Secretary may not take any action under paragraph
(2),(3),(4), or (5) of subsection (a) with respect to a loan guaranteed
under this chapter before the completion of the sequence of mitigation
options offered to the veteran to whom the loan is made under section
3732(d) of this title.''.
SEC. 3. PARTIAL CLAIM PROGRAM OF THE DEPARTMENT OF VETERANS AFFAIRS.
(a) Establishment.--The Secretary of Veterans Affairs shall carry
out a program, to be known as the ``Partial Claim Program'', under
which the Secretary may make a partial claim, described in subsection
(b), with respect to a loan--
(1) guaranteed under chapter 37 of title 38, United States
Code;
(2) regarding the primary residence of the borrower; and
(3) that the Secretary determines is in default or at
imminent risk of default.
(b) Partial Claim Described.--A partial claim described in this
subsection is the purchase by the Secretary of a portion of
indebtedness under the guaranteed loan, under which--
(1) the borrower of the guaranteed loan enters into an
agreement under subsection (c);
(2) the Secretary pays the holder of the guaranteed loan
the amount of indebtedness, subject to subsection (d), that the
Secretary determines necessary to help prevent or resolve a
default; and
(3) the Secretary receives a secured interest in the
property, subordinate to the first lien guaranteed loan,
serving as collateral for the guaranteed loan.
(c) Agreement Between Borrower and Secretary.--An agreement under
this subsection is an agreement by the borrower of the guaranteed loan
to repay the Secretary the amount determined under subsection (b)(2) at
the end of the period of such guaranteed loan, subject to the following
annual interest:
(1) If the borrower agrees to make monthly payments
beginning not later than three years after the date on which
the Secretary makes the payment under subsection (b)(2), 0
percent.
(2) If the borrower does not agree to a repayment plan
under paragraph (1), or fails to comply with such a repayment
plan, 0.5 percent.
(d) Administration of Partial Claim.--
(1) Amount of claim.--The amount of a partial claim under
this section with respect to a loan guaranteed under such
chapter may not exceed 20 percent of the unpaid principal
balance of the guaranteed loan on the date on which the partial
claim is made.
(2) One partial claim per loan.--The Secretary may make
only one partial claim per loan.
(3) Not an advance.--The Secretary may not structure a
partial claim as an advance on a new loan guaranteed under such
chapter.
(4) Application of claim.--A holder of a loan guaranteed
under such chapter who receives a partial claim under this
section with respect to such loan shall apply the payment first
to arrearages, if any, on the guaranteed loan, which may
include any additional costs (such as taxes, insurance
premiums, or homeowner's dues) the Secretary determines
necessary to prevent or resolve a default.
(5) Authority to contract.--The Secretary may enter into a
contract with an entity for service of a partial claim under
this section. Such entity shall provide quarterly statements to
the borrower.
(e) Requirements of Loan Holder.--
(1) Establishment of claim.--The Secretary may require the
holder of a loan, regarding which the Secretary makes a partial
claim under this section, to take any actions necessary to
establish the partial claim, including preparing, executing,
transmitting, receiving, and recording loan documents.
(2) Compensation of holder.--The Secretary shall compensate
the holder of such a loan appropriately, as determined by the
Secretary, for the services required of such holder under this
subsection.
(3) Exercise of powers.--The Secretary may exercise the
authority of the Secretary under this subsection without regard
to any other provision of law not enacted expressly in
limitation of this section that would otherwise govern the
expenditure of public funds.
(f) Default and Foreclosure.--
(1) Default.--
(A) In general.--Notwithstanding section 3703(e) of
title 38, United States Code, an individual who
defaults under a partial claim made under this section
shall be liable to the Secretary for any loss suffered
by the Secretary resulting from such default, and such
loss may be recovered in the same manner as any other
debt due the United States.
(B) Reduction of entitlement.--In the event of
default by an individual under a partial claim made
under this section, the Secretary may reduce the
aggregate amount of guaranty or insurance housing loan
entitlement available to the individual under such
chapter.
(2) Foreclosure.--Notwithstanding section 2410(c) of title
28, United States Code, an action to foreclose a lien held by
the United States arising under a partial claim made under this
section shall follow foreclosure procedures in accordance with
State or local law where the property involved is located.
(g) Decisions by the Secretary.--
(1) Sole discretion.--Any partial claim under this section
shall be made in the sole discretion of the Secretary and on
terms and conditions acceptable to the Secretary that are
consistent with this section.
(2) Final and conclusive.--Any decision by the Secretary
under this section is final and conclusive and is not subject
to judicial review.
(3) Effect on provision of benefits.--For purposes of
section 511 of title 38, United States Code, any decision under
this section shall not be treated as a decision under a law
that affects the provision of benefits.
(h) Compliance.--
(1) Processing payments.--The Secretary may establish
standards for processing payments under this section based on a
certification by a holder of a loan guaranteed under such
chapter that the holder has complied with all applicable
requirements established by the Secretary.
(2) Audits.--The Secretary shall carry out, on a random-
sampling basis, post-payment audits to ensure compliance with
all requirements described in paragraph (1).
(i) Guidance With Respect to Certain Loans.--
(1) In general.--With respect to a loan described in
paragraph (2), the Secretary may--
(A) before prescribing regulations, issue
administrative guidance regarding the making of a
partial claim relating to such loan; and
(B) establish, through such guidance, additional
requirements applicable to such a partial claim.
(2) Loan described.--A loan described in this paragraph is
a loan that the Secretary determines was in default on the date
of the enactment of this Act.
(j) Rule of Construction.--Nothing in this section shall be
construed to limit the authority of the Secretary under subsections (a)
and (d) of section 3732 of title 38, United States Code, as amended by
section 2 of this Act.
(k) Termination.--The Secretary may not make a partial claim under
this section after September 30, 2027.
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.
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